Nike says coronavirus has “physical” impact on business

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Nike is finally starting to reopen stores in the United States, but the company said on Thursday that it expects the coronavirus pandemic will still have a significant impact on its North American operations, in parts of the Europe and Asia during its fourth fiscal quarter.

The sportswear and footwear maker said all of its owned stores and more than 95% of its partner stores in Greater China and South Korea were up and running again. He said traffic is “growing” in these areas, but store traffic remains below levels from the previous year. Nike said demand from online consumers was “still strong,” offsetting some of the losses.

Its shares increased by less than 1% following the press release.

“We are encouraged by the recovery we are seeing in Greater China and South Korea as we continue to deepen our relationships with consumers,” said Nike general manager John Donahoe in a statement.

“With our solid digital foundation, our brand momentum and our financial position, we believe this will be a catalyst moment that will strengthen Nike’s long-term future,” he added.

Nike said it has started reopening stores in more than 15 countries, including Germany, France, the Netherlands, Brazil and the United States. and the Latin America region, and 5% in North America, are open, some with reduced hours.

Its wholesale partners, including department store operators, are also starting to reopen, he added.

However, his business will suffer as well as that of his peers. Nike said that due to store closings, product deliveries to its wholesale partners had stalled, resulting in “significantly lower wholesale revenues and higher inventories”.

When rival rival Nike Under Armor announced profits for the quarter ended March 31, on Monday, it said sales could drop 60% in the next quarter. CEO Patrik Frisk said the second quarter may be the hardest yet, as demand remains limited and Under Armor must use excessive promotions to get the product off the shelf.

When Nike released its fiscal third quarter results on March 24, the company said it was already starting to see signs of recovery in China, where the virus originated. However, it was true while the US economy was hurting. Nike has announced that it will close all stores in the United States in an attempt to stop the spread of Covid-19 on March 15.

At the end of 2019, Nike had 384 retail stores in the United States, including Converse and its outlets, according to documents filed by the SEC. Internationally, it has more than 750 sites.

Nike said on Thursday that it was seeing increased traffic and engagement on its mobile apps and website, “partially offsetting” the decline in its stores.

Nike has yet to offer a outlook for the fourth quarter. The company is expected to release its results in late June.

Nike stocks at the close of the market on Thursday have declined about 15% this year. The company has a market capitalization of $ 134.5 billion.

—CNBC I ssI CA Golden contributed to this report.

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