Nike has published worse than expected wall Street, the results of the 4th quarter, because 90% of the physical stores of the company in most regions, including North America, was closed because of the pandemic until mid-may. However, analysts highlighted the strength of digital sales Nike with an increase of 75% and a recovery of sales in China.
Nike shares (NKE), grew by more than 20% over the last quarter, down nearly 4% in after-hours trading Thursday, as investors reacted to the company’s announcement of a 38% strength fall in quarterly revenue amid closure of shops due to pandemic COVID-19.
At the same time, analysts urge investors not to draw hasty conclusions, calling the results to some extent expected and pointing to good preconditions to recovery, given the strength of the digital strategy of Nike and an example of the recovery of sales in China. Earlier in the week Marketinfo.pro wrote that “Analysts predict Nike quarter with record losses“.
The main results Nike for the 4th quarter and the full fiscal 2020
For the three months ended may 31, Nike reported a loss of $0.51 per share, or $0.60 cents worse than the average of analysts ‘ forecasts of $0.09 to earnings per share. The amount of the loss for the quarter was $790 million, compared with a profit of $989 million in the same quarter of the previous year.
The quarterly revenue fell 38% to $6.3 billion, also below estimates on wall Street of $7,52 billion to See a history of revenue and profits for Nike for the last 2 years can link.
For the full fin. 2020 total revenue fell 4% to $37.4 bln In the greater China segment revenue grew by 8% (compared to 2019 fin. year), and digital sales for the year increased by 47%. Profit was $2.6 billion or $1,60 a share, which is 36% less than in the previous year.
Key statements Nike
In its press release the company said: “today, about 90% of the stores owned by NIKE, is open worldwide. Retail traffic continues to improve week by week with higher conversion rates compared to the previous year.
In greater China almost 100% of the stores owned by NIKE, is open.
In North America, EMEA (Europe, middle East and Africa) and APLA (Asia Pacific and Latin America) during the fourth quarter were closed about 90% of physical stores which gradually began to open at a different pace in each country, starting mid-may.
Today, about 85% of the stores owned by NIKE, opened in North America and about 90% in EMEA, and approximately 65% are open to APLA or work on reduced hours.”
Income 4th quarter in the greater China region fell by 3% in regions such as North America and EMEA, they fell by 46%, the APLA region showed a decrease of 42%.
The figure of Nike in China indicates a gradual recovery, given that the previous 3rd quarter showed a strong decline in revenues of 4%, for the first time, interrupting a streak of 22 consecutive quarters of strong growth in the country.
A positive signal was the growth of digital sales NIKE 75% with strong growth in all regions, with the segment amounted to over 30% of total revenue.
“COVID-19 showed that our digital strategy is reasonable,” said Nike CEO John Donahoe
Managing Director of Ascent Wealth Partners Todd Gordon commented on the report: “Despite stopping sales of physical stores, Nike has done a good job turning to e-Commerce sales”.
Analyst at Forrester Research Sucharita kodali said that the Nike brand remain strong, and sales in China is an indication of what to expect in Western markets and in the United States, when the situation normalizes.
