Nike has reported financial results for its fiscal 2020 fourth quarter and full year ended May 31, 2020.
Fourth quarter reported revenues were US$6.3 billion, declining 38% year on year as the majority of Nike-owned and partner stores in North America, EMEA and APLA were closed due to the COVID-19 pandemic.
The fiscal Q4 period resulted in a net loss of US$790 million – due to lower revenue and gross margin as a result of the COVID-19 impact on operations, partially offset by lower selling and administrative expenses.
For its full year 2020, revenues for Nike fell 4% to US$37.4 billion (down 2% on a currency-neutral basis) due to the impact of COVID-19 on business operations, primarily in the fourth quarter.
Fourth quarter rise of digital
The company’s digital sales increased 75% in the fourth quarter (+79% on a currency- eutral basis), with strong double-digit increases across all geographies and accounting for approximately 30% of total revenue in the period.
For the fiscal year, Greater China revenues increased 8%, or 11% on a currency-neutral basis, marking its sixth consecutive year of double-digit currency-neutral growth despite the headwinds from COVID-19 in the second half of the year.
Fiscal fourth quarter results were significantly impacted by physical store closures across North America, EMEA and APLA, where 90% of Nike-owned stores were closed for roughly eight weeks in the quarter. The company’s wholesale partners largely followed the same pattern; and, as a result, product shipments to wholesale customers were down nearly 50% resulting in lower total revenue and higher inventory.
During the widespread physical store closures, Nike noted that it accelerated its connection and engagement with its consumers leveraging the strength of its digital ecosystem.
“In a highly dynamic environment, the Nike brand continues to resonate strongly with consumers all over the world as our digital business accelerates in every market,” said John Donahoe, President and CEO at Nike.
“We are uniquely positioned to grow, and now is the time to build on Nike’s strengths and distinct capabilities. We are continuing to invest in our biggest opportunities, including a more connected digital marketplace, to extend our leadership and fuel long-term growth.”
COVID-19 update on operations
As of June 25th, approximately 90% of Nike-owned stores are open across the globe. Retail traffic continues to improve week-over-week with higher conversion rates as compared to the prior year. In Greater China, nearly 100% of Nike-owned stores are open.
In North America, EMEA and APLA, approximately 90% of physical owned stores were closed during the fourth quarter with stores gradually reopening at different paces in each country beginning in mid-May. Today, roughly 85% of Nike-owned stores are open in North America and about 90% in EMEA, with approximately 65% open in APLA or operating under reduced hours.
“As physical retail re-opens, Nike’s strong digital trends continue, a testament to the strength of our brand and the investments we’ve made to elevate digital consumer experiences,” said Matt Friend, Executive Vice President and Chief Financial Officer at Nike.
“Amid macroeconomic uncertainty, we will continue to operate with agility, focused on optimizing marketplace supply and demand, cost management and leveraging our financial strength to drive long-term sustainable, profitable growth.”
