Even a strong brand like Nike has suffered from store closures and reduced sales.
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Nike published the results of its latest fiscal quarter, which showed that sales fell by 38% and the loss reached $790 million. For comparison, a year ago the brand reported a net income of $989 million. Sales of footwear fell by 35%, apparel fell by 42%, and sales of various accessories fell by 53%. The main reason for the decline was that many of the brand's stores remained closed for eight weeks. The loss reportedly resulted in a 4% drop in the value of Nike stock.
And although online sales increased 75% and accounted for 30% of total sales, this was not enough to compensate for the losses. The company planned to achieve such turnover in e-commerce by 2023, but the coronavirus pandemic accelerated the event. Now Nike has declared its intention to reach 50% of the total turnover of the entire company.
According to Placer.ai, an analytics agency that measures customer traffic, Nike's store traffic increased by 8.0% and 20.5% year-on-year in January and February, respectively. Then came the pandemic, which led to a decline in March, April, and May attendance by 60%, 99%, and 83%, respectively. But as soon as the company's stores began operating, attendance started to grow quite rapidly. In some cases, visitors had a real fight in order to buy new sneakers from their favorite brands.
It is reported that today 90% of Nike stores in the world are already open. Almost all of the company's stores are already open in China. About 85% have been reopened in North America. The company confirms rapid growth in its number of customers.
No forecasts for fiscal 2021 have been made yet, but the company's CEO, John Donahue, believes the company can recover quickly and income will be high enough in the end. According to him, Nike will continue its strategy aimed at establishing a closer connection between consumers and the brand and opening smaller stores in the future. These stores will be designed mainly to allow visitors to pick up their online orders. About 150 such stores are expected to open in the near future.
The company is optimistic in every way. It states that there are five factors that will allow us to survive all of these difficulties and continue moving forward. First of all, it is the strength of Nike brand itself, which is among the most recognized and respected in the world. The second factor is the Chinese market, which has already recovered from the pandemic and is beginning to improve its economic performance again. By the way, the drop in sales in the Chinese market was only 3%. Next comes the digital transformation of the company, the constant introduction of innovations, as well as the brand Jordan, which is becoming increasingly popular and already brings in up to 12% of income.