Nike Inc. has demonstrated its resilience despite business disruptions due to the coronavirus.
The sportswear giant’s stock surged more than 7% after market close on Tuesday following the release of a mixed third-quarter earnings report. For the period ended Feb. 29, Nike logged earnings per share of 53 cents on profits that dropped 23% to $847 million, compared with analysts’ bets of 59 cents per share.
Revenues, on the other hand, improved 5% on a reported basis (or 7% on a currency-neutral basis) to $10.1 billion, advancing past Wall Street’s predictions of $9.8 billion. Digital sales were also up 36% over the previous year. Nike attributed the performance to solid growth across North America as well as the Asia Pacific-Latin America and Europe-Middle-East-Africa regions, offset by the impact of the pandemic on its business in Greater China.
“In an extraordinarily dynamic time, Nike’s strong results are a testament to our deep consumer connections, compelling product innovation and agile teams around the world. We know it’s in times like these that strong brands get even stronger,” President and CEO John Donahoe said in a statement. “As we start to see recovery in China, no one is better equipped than Nike to navigate the current climate.”
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In the third quarter, Nike noted that revenues in Greater China were down 4% on a currency-neutral basis, breaking a streak of 22 consecutive quarters of double-digit improvement. Roughly 75% of Nike-owned and partner stores in the region had either shuttered or significantly reduced operating hours in February as the Chinese government attempted to stem the spread of COVID-19. Today, the company reports that nearly 80% of its outposts in China are open.
Elsewhere in the world, Nike has closed all stores in the United States, Canada, Australia, New Zealand and Western Europe through Friday.
“Amidst the dynamics that all are facing, we are executing against an operational playbook that will expedite Nike’s return to profitable, capital-efficient growth, leveraging our strong financial position, the strongest partnerships across the value chain in our industry and our leading digital capabilities,” added EVP and CFO Andy Campion.
On March 18, Nike pledged more than $15 million to fight the outbreak — including $10 million in contributions from Phil Knight, co-founder and chairman emeritus; Mark Parker, former CEO and current executive chairman of the board; and John Donahoe, the company’s new president and CEO.
The Nike Foundation has also announced a $1 million contribution to the COVID-19 Solidarity Response Fund and $1.1 million to support community partners across Europe, Middle East and Africa through the King Baudouin Foundation. On its domestic turf, it will donate $250,000 to the Mid-South Food Bank in Memphis, $250,000 to the Community Foundation of Greater Memphis’ COVID-19 Regional Response Fund and $500,000 to the Boston Foundation’s COVID-19 Response Fund, as well as $1 million to the Oregon Community Recovery Fund in its home state.
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