Nike revenue beats estimates as digital sales offset China slide

March 25, 2020 09:37
Nike says most of its China stores have now reopened following closures earlier due to the coronavirus outbreak. Photo: Reuters

Nike beat estimates for quarterly revenue on Tuesday as strong digital demand offset the first China sales drop in nearly six years from the coronavirus-fueled shutdowns, Reuters reports.

"At a time when people were confined to their homes, we moved swiftly to leverage our digital app ecosystem and Nike Expert Trainer network," the sportswear giant's CEO, John Donahoe, was quoted as saying on an earnings call.

Digital sales grew 36 percent in the firm's fiscal third quarter ended February.

In Greater China, such sales were up more than 30 percent, but overall sales in the region fell 5 percent due to store closures amid the virus outbreak.

The epidemic forced Nike to temporarily shut down stores to help contain its spread in China, where it was first detected late last year. The company has now closed stores in Europe and the United States where the virus is rapidly spreading.

Nike said 80 percent of its China stores have now reopened, yet it expects current-quarter sales to be flat in the region.

The company said it will continue to focus on new launches, a key growth driver, despite the cancellations or postponements of several sporting events, including this year’s NBA and NFL seasons and the Tokyo Olympics.

Total revenue rose 5.1 percent to US$10.1 billion in the fiscal third quarter, beating the average analyst estimate of US$9.80 billion, according to Refinitiv IBES data.

Net income, however, fell to US$847 million from US$1.1 a year earlier due to the hit from the outbreak and a non-cash charge related to a shift to distributor model in South America.

Nike held back from providing forecasts for the current quarter, yet its shares rose about 11 percent in extended trading after gaining 15 percent in regular hours on Tuesday. 

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