Via Financial Times

Nike said that sales lost due to widespread physical store closures during the coronavirus pandemic were not offset by gains in its ecommerce business, underscoring the sportswear maker’s reliance on bricks-and-mortar retail as it works to expand online and direct sales.

Ninety per cent of Nike-owned stores in the Americas, Europe and Asia-Pacific were closed for roughly eight weeks during the company’s most recent quarter due to virus-imposed lockdowns. Sales declines were further hampered by similar closures at Nike’s wholesale partners, the company said.

Many of those Nike-owned stores have since begun to reopen, including about 85 per cent of those in North America, the company’s largest single market by revenues.

Global revenues for the fiscal fourth quarter plummeted 38 per cent to $6.3bn as Nike swung to a loss of $790m for the period, from a profit of $989m a year ago. Nike shares, which are flat year to date, fell 2.9 per cent to $98.50 in after-hours trading on Thursday.

John Donahoe, the company’s chief executive since January, said Nike would continue to invest in its digital sales segment, which rose 75 per cent during the three months ended May, which comprised a third of revenues.

The world’s largest sports footwear and apparel maker has put direct-to-consumer and online sales at the forefront of its retail strategy in recent years, with the appointment of Mr Donahoe — a former eBay and Service Now executive — the strongest indicator yet of that commitment.

Nike traditionally made the bulk of its sales through wholesale agreements with retailers such as Macy’s, Dick’s Sporting Goods, and other bricks-and-mortar businesses. In 2015, it announced plans to double its direct sales to consumers to $16bn by this year, in part by revamping a suite of apps and launching desirable products, such as self-lacing shoes, exclusively through its own channels. As of the end of the 2020 financial year, they were $12.4bn.

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Results for the year ended in May show Nike recorded $12.4bn in direct sales.

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