Not all businesses are crashing during this pandemic!
Nike revealed its quarterly earnings on Tuesday that topped analysts’ expectations. Its digital business and growth in North America boosted which helped cushion the shortcomings from China due to COVID-19.
Reportedly, Nike’s shares shot up nearly 9 per cent in premarket trading as on Wednesday morning.
Its business in China was under recovery after a period of store closures. During the third quarter, Nike’s sales dropped 5 per cent in Greater China, following 22 consecutive quarters of double-digit growth.
At a peak in February, about 75 per cent of Nike stores were closed in Greater China and others opened for reduced hours. At present, nearly 80 per cent of its stores in Greater China are open and digital sales in China are approaching triple-digit growth.
This phase in China taught a lesson to the company and they plan to implement similar strategies in Japan, South Korea and across Europe.
The company expects its impacted businesses to travel through three phases – first is recovery period, where stores open back up, second is the period when supply and consumer demand balance out each other, and third and finally, period of getting back to sales growth.
Sneaker giant announced closure of stores located in U.S., Canada, Western Europe, Australia and New Zealand till today (27 March), while it plans to reopen stores in North America and across Europe depending on location to location.
Also, the company refused to offer fourth-quarter earnings outlook at present. But, as the traffic is slowly gearing up in China, the company expects to return to growth this year.
Net income shrank 53 per cent per share which equals to US $ 847 million compared with 68 per cent per share or US $ 1.1 billion.
Earnings in the latest period included a 25-cent charge as the company transitioned its businesses models in Brazil, Argentina, Chile and Uruguay to a different distributor model.
However, after adjusting for the charge, Nike topped analysts’ estimates of 59 cents a share.
Revenue increased 5 per cent during the quarter ended 29 February, to US $ 10.1 billion from US $ 9.6 billion a year ago. Interestingly, digital sales in Greater China were up with a whopping 30 per cent and more.