Nike reported a steep decline in revenue for the company’s fiscal fourth quarter, citing the closing of a majority of its stores in key North American and European markets, as well as other territories.
The shoe and apparel maker reported a year-over-year revenue loss of 38%, down to $6.3 billion. Income also plummeted by 49% to $2.3 billion, according to company SEC filings. Revenue results came in well under analysts’ estimates of $7 billion.
During the quarter that runs from March 1 to May 31, 90% of Nike-owned stores outside of Asia were closed for eight weeks, Nike said. At least 65% of company-owned stores around the world today are operating at reduced hours.
Meanwhile, Nike’s digital sales performance provided one of the lone bright spots for the company in what was otherwise a disappointing quarter by its standards.
Digital sales increased 75% in the period, including double-digit increases across all geographies resulting in approximately 30% of total revenue. Digital sales at the brand also increased by 47% for the entire year to $5.5 billion.
“The global pandemic has made it clear that consumer behavior is changing rapidly, providing us the opportunity to accelerate the pace of our digital acceleration,” CEO John Donahoe said on an earnings call with analysts. “Over the past few years, we have shifted from a legacy wholesale distribution model to investing in a model that gives consumers a more premium shopping experience.”
Nike will now double down on that digital-first approach, Donahoe said. The company’s digital apps have been used to meet consumer demand during the COVID-19 outbreak. According to the company, the Nike e-commerce app has been downloaded 8 million times since February. The Nike SNKRS app also surpassed $1 billion in global sales for the first time in the 2020 fiscal year.
Nike executives again credited the company’s focus on digital sales without wholesale shipments available to partners for helping the company navigate the early days of the coronavirus in China. In time, Nike says that digital sales worldwide could make up 50% of its overall business by improving customer segmentation, marketing, and enhanced inventory management tools.
“Nike digital accelerated growth each month in the quarter including triple-digit growth globally in May even as stores reopened,” Nike CFO Matthew Friend said. “This trend has sustained through the first three weeks of June and in some markets, digital growth has accelerated even further.”
Fulfilling consumer demand online, however, did little to offset annual losses in all regions except Greater China, which improved by 8%. North American sales dropped 9%, while EMEA fell 5%.
Nike overall disclosed revenue of $37.4 billion, down 4% for the full year. Net income also fell by 7% to $16.2 billion.