Nike last week reported an unexpected quarterly loss because of widespread store closures forced on it by the COVID-19 pandemic, but the situation would have been worse without digital sales taking up some of the slack.
The world’s largest sportswear brand revealed that global revenues for the fiscal fourth quarter plunged 38% to $6.3bn, causing a net loss of $790m, due to COVID-19. However, this was partially offset by lower selling and administrative expenses.
“Our fourth quarter results were significantly impacted by physical store closures across North America, EMEA and APLA [Asia-Pacific and Latin America], where 90% of Nike-owned stores were closed for roughly eight weeks in the quarter to protect the health and safety of teammates and consumers and help slow the spread of the COVID-19 pandemic,” Nike said in a statement.
Revenues declined 46% in both North America and EMEA, although they held up much better in Greater China, where revenues fell by just 3%.
In addition, its wholesale business, through which Nike sells merchandise to other retailers, witnessed a 50% drop in shipments over the same period.
But with restrictions being eased or significantly lifted in many of Nike’s most important markets, the company was able to report that most of its stores are now open for business again.
About 90% of Nike-owned stores are now open around the world, including nearly all its stores in Greater China, while 85% and 90% of its stores are now open in North America and EMEA respectively.
However, just two-thirds (65%) have been able to reopen or operate under reduced hours in APLA – most likely because Brazil and some other countries in Latin America are fast-becoming new epicentres for the disease.
Importantly, Nike also revealed that its digital investments over the years paid off during these difficult times because online sales increased 75% in the three months to the end of May, while new membership registrations to Nike apps more than doubled to 25 million.
Nike CEO John Donahoe told analysts that digital sales rose to 30% of overall revenues, reflecting a shift in consumer behaviour, and that he expected digital to reach half of Nike revenues in the foreseeable future, the Financial Times reported.
“COVID-19 has shown that our strategy is sound,” he said, adding that the company would continue to maintain its focus on its digital strategy.
Sourced from Nike, Financial Times; additional content by WARC staff