Operator: Good afternoon, everyone, and welcome to NIKE, Inc. Fourth Quarter Fiscal 26 Conference Call. Release, you will find it at investors.nike.com. Leading today's call is Paul Trussell, VP of Corporate Finance and Treasurer. I would now like to turn the call over to Paul Trussell.
Paul Trussell: Thank you, operator. Hello, everyone, and thank you for joining us today to discuss NIKE, Inc.'s Fourth Quarter Fiscal 2026 results. Joining us on today's call will be NIKE, Inc. President and CEO, Elliott Hill, and EVP and CFO, Matt Friend. All growth comparisons on the call today are presented on a year-over-year basis and are currency neutral unless otherwise noted. We will start with prepared remarks and then open the call for questions. I'll now turn the call over to Elliott Hill.
Elliott Hill: Thank you, Paul. I'm proud of the progress our team made in fiscal year '26. When I look back at where we started the year and where we are today, it's clear that we're building a much stronger foundation for our company. Through our Win Now priorities, we're elevating the fundamentals of our business across our team culture, innovative product, brand strength and how we serve consumers in our countries and cities. Win Now is making the comeback possible. It's what's enabled us to move about 8,000 teammates into vertical sport teams under our new operating model, the Sport Offense, while also taking meaningful steps to simplify and accelerate our supply chain and technology. As our foundation improves, the Sport Offense is starting to create impact. Our renewed obsession with sport and the success of our athletes is fueling energy for our brands and building momentum in our performance business, which grew mid-single digits this fiscal year. Overall, the results aren't there yet. We know we're not living up to our full potential, particularly in NIKE Sportswear and Jordan Streetwear, where sell-through remains challenged, impacting both current discounting and future order books. We're operating in a more complex macro environment, where we're seeing added pressure on traffic and discretionary spending across our geographies. But we're focused on what we can control, bringing each sport together across product, brand, marketplace and operations and deepening our connections with athletes, consumers and partners. When those dimensions connect, they create the NIKE multiplier. It's repeatable and sustainable. That's why I'm confident we're building NIKE the right way, not for the next quarter, but for the next decade. This year, we directed our marketing, social and communications outreach to build influence across a wide network of sport-specific communities through our deep portfolio of athletes, creators and sport partners. When we lead with sport authentically, consumers respond, and we see that in both internal and external brand tracking. Our focus now is translating that brand strength into healthier demand, cleaner marketplaces and sustainable growth. We've now delivered 5 consecutive quarters of double-digit growth in NIKE Running, adding roughly $1 billion to our Running business. In FY '26, across Western Europe and North America, we gained 5 points of running market share in statement footwear, more than any other top 5 brand. The integrated marketplace is one of our most important areas of transformation. We've been rebuilding our wholesale relationships, expanding our outreach and improving how we show up across channels. For the fiscal year, wholesale revenue grew 4%, led by double-digit growth in North America. We've also made significant investments in physical marketplace, refreshing more than 15,000 spaces in wholesale doors around the world. In NIKE Direct, we've taken equally important steps — we're elevating the user experience by leading with performance, celebrating sport moments, and we're discounting less on NIKE Digital. In FY '26, we've elevated more than 150 stores with sport-led experiences. We're also investing in experiences in our key countries and cities to accelerate demand. In Global Football, our grassroots tournament Toma has reached more than 10,000 kids across 25 cities to date. In basketball, we continue to invest globally from our partnerships with the Chinese High School Basketball League and its 600 teams to Jordan's The One tournament in 20 cities around the world. In Running, we launched the After Dark Tour in Shanghai — it will reach 7 cities this fall, and last year 50,000 runners joined with 1/3 being first-time runners. As we strengthen NIKE, Inc.'s foundation, we're taking decisive action across our supply chain to lower cost, streamline operations and rightsize our distribution network. We've redeployed resources from our NIKE Direct technology teams to better support the company end-to-end. That's especially important in Greater China, a critical long-term growth market for NIKE, where we are fully committed to winning. Our teams in China are executing a comprehensive reset, returning to sport and innovation, taking a more local approach to product creation and building a territory-level offense. Converse sharpened its strategy this quarter, getting clearer on the role it plays within NIKE, Inc. and where it will grow, especially with the Chuck Taylor and Jack Purcell franchises. As part of that focus, we announced that Shai Gilgeous-Alexander has joined the NIKE Basketball family. This move allows Converse to fully focus on serving creators through its lifestyle business. When we're focused, we win. And right now, global football is the best example of that playing out through the Sport Offense. What feels different this time around with the World Cup is we're not treating the tournament as a single moment — we're using it to reshape our business, telling a connected story over time and building momentum that carries well beyond the tournament. We built a full NIKE football universe, starting with a simple image of 31 Polaroids. An epic film called Rip the Script followed, branching off into individual athlete stories, collaborator collections, innovation unveils, retail experiences and local tournaments. Every beat, every story is a doorway, giving different micro communities their own way in. By the first week of the World Cup, we had 1.5 billion views of our various stories. At the center of the NIKE Football universe is amazing product. We launched Aero-FIT in our national team kits. By the start of the tournament, we had already sold 2.5x the number of kits compared to the same period in World Cup '22. We also launched our new Mercurial in two expressions of speed — at launch, the Mercurial became the fastest-selling 24-hour launch for cleated footwear in the history of NIKE Direct. As we move into fiscal year '27, here's what you can expect from our teams. As we scale the Sport Offense across more sports, we expect growth to expand beyond running into training, basketball and ACG. But that progress will continue to be uneven. We expect Sportswear and Jordan Streetwear to continue to be negative this fiscal year with improvement expected in the back half. Together, they represent approximately half of our revenue. We are moving quickly to reposition both businesses. In the second half, NIKE Sportswear will introduce more than a dozen new footwear styles each with distinct consumer journeys. Across the enterprise, we'll operate with even greater discipline to improve planning accuracy, strengthen inventory management and expand our margins over time. Most importantly, we look forward to sharing the next phase of our growth strategy at our Investor Day on November 16 and 17. Before I pass it to Matt, I want to take a moment and recognize him for his many contributions to NIKE over his nearly 18 years at this company. Matt helped guide the company through a demanding stretch, and he has been a trusted partner to me and to this team. I appreciate his continued support and his commitment to ensuring a seamless transition in the coming weeks and months. I'd like to thank him for all that he has done for NIKE and wish him the very best in his next chapter.
Matthew Friend: Thanks, Elliott. I've truly valued the partnership with you and this team, and I'm proud of the progress that we've made together. As we closed fiscal '26, we made meaningful progress across the business — rebalancing the product portfolio, driving momentum and growth in performance while reducing classic footwear franchises by more than $2 billion, keeping revenue flat on a reported basis versus the prior year, stabilizing gross margins excluding the impact of incremental tariffs, taking initial steps to reset our cost base and improve operating efficiency, and maintaining a strong balance sheet with substantial liquidity. Our fourth quarter financial performance was in line with our expectations. However, the operating environment became more challenging as we progressed through the quarter. After a stronger start in March, especially in North America, by mid-April we began to see a deceleration in retail sales trends. Our consumer is under pressure around the world, and we can particularly see it having a larger impact on Sportswear, which declined double digits in the quarter with a similar decline in retail sales. At the same time, momentum in performance sports continued to build, growing mid-single digits and delivering positive year-over-year retail sales comps across Running, Training and Global Football as well as other sports. Before I turn to our results, I want to address an unplanned benefit related to tariffs recognized in the quarter that was not included in our previous financial guidance. In the fourth quarter, we determined that the financial recovery of claims related to incremental tariffs paid under IEEPA had become probable. This resulted in the recognition of a one-time benefit of $986 million, offsetting the IEEPA tariffs embedded within cost of sales that had been expensed throughout fiscal '26. As of quarter end on May 31, we collected over $300 million of cash related to these claims. The remainder was recorded to accounts receivable as we await recovery. Tariffs remain a dynamic cost headwind that we expect to continue looking forward. For the quarter, revenues were down 1% on a reported basis and down 4% on a currency-neutral basis, reflecting modest growth in North America, more than offset by expected declines in Greater China, EMEA and Converse. NIKE Direct was down 9%, with NIKE Digital declining 12% and NIKE stores down 7%. Wholesale grew 1%. Gross margin was 49.2%, up 890 basis points versus the prior year, driven by a 900 basis point benefit related to recovery of IEEPA tariffs. Excluding this benefit, gross margin would have been 40.2%, down 10 basis points versus the prior year. SG&A was down 2% on a reported basis. Our effective tax rate was 19.6%. Earnings per share for the quarter was $0.72 and excluding the benefit on tariff recovery was $0.20. Inventory was flat versus the prior year with continued progress on aged inventory in Greater China. For the full year, revenue was flat on a reported basis and down 2% on a currency-neutral basis. Gross margin was 42.9%, up 20 basis points versus the prior year, including a 210 basis point benefit related to recovery of IEEPA tariffs — excluding the benefit, gross margin would have been 40.8%. Diluted earnings per share was $2.10, down 3% versus the prior year; excluding the benefit on tariff recovery, earnings per share would have been $1.58. In North America, Q4 revenue grew 3%. NIKE Direct was down 6%, NIKE Digital was down 5%, NIKE stores were down 7%. Wholesale grew 10%. EBIT increased 91% on a reported basis; excluding the tariff refund benefit, EBIT would have declined 1%. North America continues to drive momentum in performance, including strong double-digit growth in Global Football and Running as well as growth in kids and golf. Sportswear was down high single digits. Retail sales grew over the first 6 weeks of the quarter, however we saw a deceleration in late April that we continue to monitor closely. One highlight — our revenue growth and retail sales comps with Foot Locker were positive for the first time in 4 years. In EMEA, Q4 revenue was down 6%. NIKE Direct declined 16% with NIKE Digital down 24% and NIKE stores down 9%. Wholesale was down 1%. EBIT was down 8% on a reported basis. EMEA continues to work through heightened inventory and promotional levels, disruption in the Middle East and a higher portfolio mix with Sportswear. Off-price was down over 50% following aggressive actions to reduce promotions, resulting in a 15-point improvement in full price realization. Total inventory dollars were up low double digits with actions in place to reduce supply and accelerate liquidation. In Greater China, Q4 revenue declined 17%. NIKE Direct declined 14%, with NIKE Digital down 25% and NIKE stores down 9%. Wholesale declined 19%. EBIT was down 20% on a reported basis. In-season sell-through has improved sequentially and average retail discounts are down. Running grew mid-single digits and Global Football and Tennis were up double digits. Our House of Innovation in Shanghai posted double-digit growth for the quarter. Inventory was down double digits with units also down double digits. In APLA, Q4 revenue was down 1%. NIKE Direct declined 3% with NIKE Digital down 8% and NIKE stores up 2%. Wholesale was up 1%. EBIT declined 1% on a reported basis. Running and Global Football grew double digits with high single-digit growth in tennis and ACG. Now on our outlook. The environment continues to be volatile, including evolving tariff policies, ongoing disruption in the Middle East, oil prices and other factors impacting operating costs and consumer behavior. We are not expecting the environment to improve meaningfully over the next 6 months. We reiterate our expectation for earnings to be flattish over the 3-quarter period from Q4 fiscal '26 through Q2 fiscal '27, excluding the benefit from tariff recovery. However, the composition has shifted. Considering the current macro environment and recent sell-through trends, we are taking actions to tighten buys, reduce future sell-in and manage inventory. We now expect revenue to be down low to mid-single digits, with Q2 having a sequential deceleration from Q1 due to some unique factors equating to a multipoint headwind, including higher digital promotions in the prior year in EMEA and timing of North America wholesale shipments. We now expect gross margin expansion beginning earlier in Q1. Specifically for the first quarter, we expect reported revenues to be down low to mid-single digits with no expected benefit from foreign exchange and currency-neutral revenue growth consistent with recent performance. We expect gross margin in Q1 to be slightly positive. Our tariff forecast is based on incremental tariff rates of 10% continuing through the end of July and then increasing to 15% thereafter. We expect Q1 SG&A dollars to be flat with operating overhead declining, while demand creation grows high single digits as we invest into the World Cup. We expect our full year tax rate to be in the low 20% range.
Elliott Hill: Before we go to questions, I want to leave you with one thought. Earlier this month, we watched something special happen in New York. The Knicks became NBA champions, a team that had carried the weight of expectations for more than 50 years, finally broke through. The championship wasn't built on a single series or even in one season. It was built over time through step-backs and step-forwards, through relationships and buying into a system where everyone knows their role. They didn't flinch. They didn't panic. They went to work, chipping away, one stop, one bucket, another stop again and again. That's not luck. That's a team that's ready. Most importantly, that's belief — belief in their system, belief in each other. And that's what I see in our team. We believe in our system and each other and the way we're building this, not because the work is finished and not because every result is where we want it to be today, but because we know what it's built on. I see the progress. I see the structural change. I see the foundation getting stronger. I see the Sport Offense taking hold. I see a team that's been tested and is ready for what's in front of us. The Knicks reminded all of us of something important — the real story is never just a celebration. The real story is everything it took to get there. And that's exactly how we're building NIKE, the right way, because the goal isn't one championship. It's to build a team that can do it again and again. Operator, we are ready for questions.
Operator: Our first question will come from the line of Adrienne Yih with Barclays.
Adrienne Yih-Tennant: Elliott, one of the things we talked about was the difficulty in full price sell-through of primarily Sportswear. I'm just trying to figure out how much R&D and innovation investment is going into the Sportswear category to drive future growth. If you're pulling back on inventory and focusing on full price selling, having struggled in full price selling, just wondering how you can get the performance success to halo out to Sportswear.
Elliott Hill: Great question. Let me start first with the Sport Offense because it's really important for everyone on the call to understand. We understand the importance of getting both NIKE Sportswear and Jordan Streetwear back to growth. With that said, our point of differentiation is our sport business, and that creates the halo over both of those brands. It's also what differentiates us from fashion brands. That's why we've put so much time on the Sport Offense — we believe that's how we create authenticity. We've created a portfolio of sport verticals, small functional teams focused on consumers. NIKE Running led the way, and as you heard in the prepared remarks, we've had great response with the sharp focus on the consumer whether it's the product, the investments we've made on the ground in retail, with Ekins or tech reps. Running grew $1 billion over the last 5 quarters and we gained 5 market share points. Shifting to other sports — we see it in the Sport Offense working in real time. NIKE Basketball. The way they responded around the Knicks championship has been phenomenal — the ad we ran, the championship product, the preorders in footwear. NIKE Football — the NIKE Football team is leveraging the World Cup to create a halo over the NIKE brand, not just sport but also culture. We see momentum gaining in training, tennis, golf, outdoor. I'll use one example — I'm not sure if you guys watched Serena today, but she had the Radical Air on. That's a performance product and that innovation will start to show up in some of our Sportswear as well. So when we lead with sport, we win. As it relates to Sportswear and Jordan, we have taken $2 billion out of the market in FY '26 of our classic franchises. We do now have dedicated teams against each of those consumers, and that team is looking to the future. In the second half of FY '27, Sportswear is going to introduce more than a dozen new footwear styles — not just going back to the vault and doing old retro shoes, but leveraging innovation with newness and freshness in new silhouettes. The Sportswear team is moving to quickly reposition the business, being more community-driven, on the ground, working with local creators, authentic storytelling and product. We're also investing in accelerating our local product creation. In the end, it's going to take time to scale, but I'm confident in the work the teams are doing.
Operator: Our next question will come from the line of Bob Drbul with BTIG.
Robert Drbul: Matt, I just want to say thanks for the last 17 years. It's been a pleasure, and wish you all the best.
Matthew Friend: Thanks, Bob.
Robert Drbul: Elliott, when you think about the innovation pipeline, one of the bright spots really has been the Mind. When you think about your ability to scale the Mind shoe and broaden that out, can you talk about what you're doing throughout the business and how quickly that can occur? And where are you most optimistic and excited about what is coming in the pipeline over the next 6 to 18 months?
Elliott Hill: We're leading with the Sport Offense — we now have small cross-functional teams against each of the sports, obsessing the consumer, taking insights from the consumer, translating that into a relentless flow of innovative, beautiful, coveted product. The first time you'll see product across all of the sports that the teams have worked on from brief to market will be spring '27 — that will be the first time you see the fruits of those teams' efforts. But I am excited about what the team continues to do in Running. This quarter alone, we launched the PEG 42, a full length encapsulated Zoom Air bag that sold through well. The Aero-FIT product we launched in football is going to show up in Running apparel in fall '26. We've got a Vomero Plus 2 coming in Running. ACG continues to bring really interesting product — the Radical Airflow is amazing, and that sold well, the long sleeve sold out immediately. Football — we've talked a lot about Aero-FIT, the Mercurial pack coming back next year with the Women's World Cup. We're hosting retailers in New York and have had tremendous feedback to the product, both in sport and in culture. Basketball — excited about the dimension the team is bringing. Caitlin Clark's coming, launching in holiday '26. Training — NIKE Mind, we see a big opportunity there and you'll see us scale that beyond the slide coming in spring of '27. Free MetCon, another performance fabric innovation with Free, doing well. NIKE Pro, men's and women's. In Sportswear, probably the best example this quarter would be the Moon Shoe. It's taken time to get the flow of innovation and product going, but I'm excited by what the team is doing. You'll start to see a season in, season out, that relentless flow of product that we expect out of NIKE.
Operator: Our next question will come from the line of Matthew Boss with JPMorgan.
Matthew Boss: Elliott, could you elaborate on the sequential cadence of sell-through trends across Performance relative to Sportswear? And what you see as the optimal mix between Performance and Sportswear roughly versus the roughly 50-50 split today? And then Matt, just on the numbers, could you help us bridge the drivers of first quarter revenue being down low to mid-single digits and further moderation in the second quarter relative to the negative 1% decline here in the fourth quarter?
Elliott Hill: We don't break out sell-through by Sport and Sportswear. What I can tell you is we had a strong start in March, especially in North America on sell-through. The teams watch it every single week, and by mid-April we began to see a deceleration in retail sales trends. That softness did coincide with our consumer being more under pressure, impacting traffic and discretionary spend. But as we moved into June, we are seeing a halo being created by the World Cup. So it's something we will continue to monitor every single week and make the necessary adjustments on forward orders. In terms of optimal mix, ultimately the consumer is going to decide. If we predetermine we want one business to be bigger than the other, I think it forces our teams to do unnatural things to get to that number. So it is not a number we're driving the teams towards — we're going to let the consumer ultimately decide the mix of Sport to Sportswear.
Matthew Friend: On the revenue guide — the biggest driver in Q1 versus Q4 is the fact that FX will no longer be a tailwind to revenue. Outside of that, we don't expect a meaningful change in the mix of the portfolio or anything else. As it relates to Q2, we wanted to highlight the sequential deceleration relative to Q1. The two largest factors equating to a multipoint headwind were much higher levels of digital promotions in EMEA in Q2 last year — our off-price business was down 50% following aggressive actions to reduce promotions this year, creating a comp issue in Q2 of next year — and extraordinarily high wholesale growth in North America in Q2 last year, also related to timing anomalies. We just wanted to call that out in advance.
Operator: Our next question will come from the line of Lorraine Hutchinson with Bank of America.
Lorraine Maikis: I was hoping you could go into a little more detail on your China strategy. It sounds like there are some renovations underway for the physical fleet, but how are you thinking about the direct-to-consumer, particularly the digital business from here?
Elliott Hill: Lorraine, I've said this every quarter and I'll continue to say it. China is the second largest market today and will remain so. We remain committed to serving the Chinese consumer. We have to get back to growth in China, we have to be more premium and culturally relevant, and we have to lead with Sport. Running grew mid-single digits this quarter — we had a great launch of the Peg 42 in 2,000 doors with really elevated presentation. Global Football was up double digits. We had great storytelling both digitally and physically on the Mercurial launch. The team is moving resources out to our territories and cities, connecting with consumers, which is critical to our success there. We've got the After Dark Tour from a Running perspective going there, and we celebrated the Chinese basketball league. But we know that's not enough. We are going to take additional actions to reimagine the marketplace. It has to be easier for a consumer to find us, we have to be more culturally connected, we have to continue to clean up and elevate the marketplace, and we have to invest in elevating online and offline storefronts for a consistent consumer experience. Success in China requires deep local partnerships. Two last points — local for local: we have hired and are resourcing our Greater China local product creation team, and they will be delivering locally designed, developed and manufactured product in China in holiday '27. And it's been great to have Cathy Sparks leading that team. We have a clear diagnosis, we have a plan in place, and we're moving with urgency.
Matthew Friend: I just wanted to add a couple of points. We're seeing recovery in full price realization on digital — the team has taken aggressive actions to reduce promotions over the last two quarters, and we are seeing that bear fruit across our digital properties in Greater China including partners. Our House of Innovation in Shanghai grew double digits in the quarter. Where we've elevated our other retail doors with our partners, we're seeing strong comp performance in those doors for another sequential quarter. We do expect that the revenue trends in Greater China over the near term will be in line with our recent performance. And we continue to believe that profitability will bottom before sales in this market.
Operator: Our next question will come from the line of Michael Binetti with Evercore ISI.
Michael Binetti: Matthew, let me add my thank you for the last 17 years, wishing you all the best.
Matthew Friend: Thanks, Michael.
Michael Binetti: Maybe just a couple of brief comments on where the order books on the wholesale side saw the most impact, which geos got better or worse. And then just a qualitative thought on the back half of fiscal '27 — I know you commented Sportswear will be down for the year but improves in the second half. Is that negative as you start to look at spring/summer '27 books? And how are retailers approaching spring/summer '27 overall given the aggressive actions you're taking as you work through the channels?
Elliott Hill: Here's what I'd say on the outlook — we reiterate that we expect earnings to be flattish over the 3-quarter period that we guided. But we do know the composition has changed. Part of that is the softer sell-through and weaker macro environment, and we are tracking sell-through weekly and making adjustments. We expect revenues over that guided period to be down low single digits to mid-single digits. At the same time, we expect gross margins to expand in Q1, and we are actively managing costs in our business — we will see the benefits beginning in Q2. We look forward to sharing more about our overall view to the future at Investor Day from an outlook perspective. We continue to track sell-through, the order books, and we're making the adjustments that we need to make.
Operator: Our next question will come from the line of Aneesha Sherman with Bernstein.
Aneesha Sherman: Best wishes to you, Matt. Elliott, about 6 months ago, you talked about being in the middle innings on the turnaround. Can you give us an update on where you're at? And do you expect FY '28 to be the first normal year of operations? And Matt, a follow-up on margins — you've said there's a clear path to double-digit margins. You guided for a faster inflection in margins than before. Can you walk through some of the main drivers of this margin inflection aside from operating leverage?
Elliott Hill: I don't think there's been anything normal since I've sat in this chair. In December of '24, we launched the Win Now actions, and it helped us rebuild the foundation of NIKE. We remain on track to sunset the Win Now actions by the end of this calendar year. The idea was to move through the actions in a really thoughtful sequence — we began first around culture, getting the team refocused on sport and growth. Then it was about reigniting our brand, being more emotional and inspiring with consumer connections. Then we started to focus on our product portfolio driving a steady flow of innovative, coveted, beautiful products. And now it's about how we then start to execute out into the countries and the cities around the world. Sunsetting Win Now sets us up to run the Sport Offense, and we are going to share more of what's to come next at our Investor Day this fall. We're not building this business for the next quarter or the next year — we're building it for the decade to come.
Matthew Friend: On margins, our performance this quarter has given us increasing confidence that our margins are stabilizing and that we're starting to see a pathway back towards gross margin expansion. In the fourth quarter, our margins excluding the tariff benefit were down 10 basis points versus the prior year, better than how we guided — we guided down 25 to 75 basis points. The biggest driver was discount improvement in North America — lower sales-related reserves, lower cancellations and lower discounts. We've had 4 quarters of sequential improvement in our margins overall throughout fiscal '26. It's also really important to note that we highlighted in the third quarter a meaningful opportunity to structurally improve our gross margins, really focused on taking cost out of our supply chain and the make of our product. The actions we took in Q3 and Q4 were the initial steps — reducing the number of facilities we operate, changing the size of our workforce, changing the way we flow product from factory to retail. While those were costs largely in fiscal year '26, we expect those to drive margin expansion in fiscal year '27 and contribute to this trajectory to get back to double-digit margins. And as we continue to tighten buys, reducing the order book in holiday and looking beyond, we do expect a more full-price business and a higher and healthier business, and that should help us pull margins up in the geographies outside the U.S. that are still depressed relative to where they were.
Operator: Our final question will come from the line of Ike Boruchow with Wells Fargo.
Irwin Boruchow: Matt, congrats on the 17 years. I want to focus on North America wholesale. Are there any quarters next fiscal year where you're expecting North America wholesale to decline, just based on the sell-in and some of the comments you made on POS? Can you help shape that, at least for the first half?
Elliott Hill: North America continues to lead the comeback. What Tom Peddie and his crew have done — and I think part of it is because they've centered on sport and they're elevating the marketplace, not only our own digital and physical footprint but also the relationships with the wholesale team. When we do elevate, we see better sell-through, both in our own doors and our partner doors. The team is doing a great job of managing sell-through every single week, making certain we're adjusting order books, shipping in the appropriate level of inventory so that we drive revenue and profitability for ourselves and our wholesale partners. The team's found a really good rhythm and I remain very bullish on North America and their ability to continue to have sustainable growth moving forward.
Matthew Friend: When you look at Q4 and the North America wholesale growth reported up 10%, I want to make the point that we didn't sell in up 10%. A meaningful amount of that revenue growth was associated with lower returns or sales-related reserves and lower discount and lower cancellations. It's a healthier business in North America that contributed to that growth. Looking forward into '27 specifically — Q2 does have a tough compare in North America. Without getting into the specificities of every quarter, we continue to believe North America is leading our progress. We've spoken for several quarters about the geos operating on different timelines. While we've seen a little bit of a blip associated with retail sales in North America, it's highly correlated with gas prices and how those fluctuated. We continue to believe North America is out front leading us in our turnaround and comeback. I referenced Foot Locker — this quarter was the first quarter we grew both NIKE revenue plus NIKE retail sales in Foot Locker in over 4 years. They're an important partner to us, especially in North America. And we continue to be furthest ahead in the progress we're making in NIKE Direct and Digital in North America. We're on the right path.
Operator: And that will conclude the question-and-answer session and our call today. Thank you all for joining. You may now disconnect.