Home / Companies / News /  Nike powers through pandemic with digital push

Nike Inc.’s pivot to e-commerce has helped the sneaker giant power through the coronavirus pandemic.

On Friday, the company said its flagship brand’s digital revenue increased 84% in the quarter ended Nov. 30, which included Black Friday. The strong sales from Nike’s websites and mobile apps—along with strong demand in China—helped the company log overall sales gains and higher profits than the year-ago period.

“These are times when strong brands get stronger," Chief Executive John Donahoe said on a conference call. He said the latest results reflect the strength of Nike’s strategy and that he was optimistic about the Covid-19 vaccine.

Nike is among several retailers that have benefited from earlier efforts to capture online sales. Before the pandemic hit, the sportswear giant had been beefing up its direct-to-consumer business through its own website and stores. It pared back the number of wholesale stores that could sell its goods and parted ways with Inc. last year. It also had been investing in apps for shopping, selling sneakers and guided workouts.

In the early months of the pandemic, Nike closed stores and continued to pay its workers, but doubled down on digital sales while consumers were confined to their homes. On Friday, the company said more than 90% of its owned stores were open during the quarter, but they continued to experience declines in traffic due to the pandemic and safety-related measures.

The Covid-19 pandemic has changed the U.S. retail landscape by accelerating e-commerce adoption among shoppers, particularly older people, according to Jay Sole, an analyst at UBS. In a research note Friday, he wrote that the bank is forecasting more store closures and the online share to reach 31% of U.S. retail sales by 2024, up from 14% in 2019.

Mr. Donahoe, a former eBay CEO who took over Nike’s top job at the start of the year, said the company has had three straight quarters of roughly 80% digital growth, which he said has helped the brand take market share from competitors. “The consumer shift to digital is permanent," he said.

Big box chains such as Target Corp., Home Depot Inc. and Best Buy Co. have benefited from investments they made to handle online orders and offer curbside pickup services. Those chains—along with Amazon—have reported strong sales heading into the critical holiday season, even as department stores and others have struggled after temporary closures.

Bricks-and-mortar stores have announced thousands of closures this year, and some retailers with debt loads have filed for bankruptcy protection. Restaurants, department stores and vehicle dealerships all reported sharp sales declines in November, with clothing and furniture purchases falling.

Foot traffic to retail stores has declined during the pandemic but e-commerce spending has helped offset lost in-person sales. NPD Group estimates that overall holiday retail sales are up 2% from last year through Dec. 12, as fewer promotions and higher online sales buoy the industry.

Even though many gyms have been closed, athletic apparel and equipment makers have reported strong demand as more people work and exercise at home. Peloton Interactive Inc. has struggled to keep up with orders for its exercise bicycles and Lululemon Athletica Inc., which sells yoga pants and other loungewear, posted a big jump in sales and profits in the most recent quarter.

Nike’s total quarterly revenue was $11.24 billion, up 9% from a year earlier. The results were boosted by the Greater China market, where revenue rose 24%, while sales in North America, its biggest market, rose just 1%. For the quarter, net income rose 12% to $1.25 billion, or 78 cents per share.

Nike also has been cutting expenses, revamping its management team and shifting staff. It has announced plans to eliminate hundreds of jobs this year, though it said the moves weren’t in response to the pandemic.

The company increased its full-year outlook for revenue, now expecting growth in the low-teens percentage. It also expects improved profit margins, in part due to lower inventories and plans for fewer markdowns.

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