NKE · 10-K · 2026A · Full report

Critical Accounting Estimates

NIKE, Inc. · 2026-07-15 · Importance 10 · Surprise 6

Management identifies sales-related reserves, inventory reserves, hedge accounting for derivatives, income taxes and contingent liabilities as critical accounting estimates that could materially affect reported amounts. NIKE states that estimates of discretionary returns, discounts and claims are based on historical rates, specific identification of outstanding items and expected but not finalized claims, and that fiscal 2026 variances in sales-related reserves were not material to reported Revenues. Inventory reserves are based on assumptions about demand, market conditions and existing inventory levels, and NIKE records reserves to reduce inventory to estimated net realizable value when appropriate. For hedge accounting, NIKE hedges forecasted foreign currency and interest transactions and reclassifies gains/losses on over‑hedged portions from Accumulated other comprehensive income to Other (income) expense when forecasted transactions are no longer probable within the designated period.

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