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Mayank Marwah
Mayank Marwah
Articles (860) 

Nike Reports Disappointing 4th-Quarter Earnings and Revenue

Digital sales climbed 75% in the quarter

June 26, 2020 | About:

Nike Inc. (NYSE:NKE) released its results for the fourth quarter of fiscal 2020 on June 15 after the market closed. The company’s revenue dropped from the prior-year quarter and fell short of analyst expectations, despite robust digital performance. Earnings also fell short of predictions.

Key metrics

The company, which is known for its athletic shoes and apparel, posted a loss of 53 cents per share in the quarter, down from earnings per share of 62 cents in the prior-year quarter. Revenue of $6.31 billion declined 38% on a year-over-year basis. Analysts had predicted EPS of 9 cents on $7.3 billion in revenue.

During the quarter, Nike’s gross margin dropped to 37.3% due to mounting product costs, which was only partly offset by higher average selling prices.

At the end of the quarter, the company had cash and cash equivalents and short-term investments totaling $8.8 billion.

Online sales were up 75% in the reported quarter as the coronavirus pandemic and the resulting store closures rapidly increased the pace of digital adoption. E-commerce sales made up 30% of the total quarterly revenue.

Chief Fiancial Officer Matt Friend commented that e-commerce sales could account for half of company’s total sales “in the foreseeable future."

President and CEO John Donahoe had the following to say:

“In a highly dynamic environment, the NIKE Brand continues to resonate strongly with consumers all over the world as our digital business accelerates in every market. We are uniquely positioned to grow, and now is the time to build on NIKE's strengths and distinct capabilities. We are continuing to invest in our biggest opportunities, including a more connected digital marketplace, to extend our leadership and fuel long-term growth.”

To further strengthen its online performance, the footwear and apparel giant said it would open 150 smaller-format stores on a global basis where the customers could pick up their online orders.

By geography

In North America, sales plunged 46% to $2.23 billion, driven by the physical store closures across the region.

In Greater China, sales were down only 3% as the company’s stores started opening faster in the region as compared to U.S.

Nike said approximately 90% of company-owned stores have been opened worldwide as of Thursday.

In China, 100% of the stores are operational as the region has recovered after the initial outbreak. In North America, nearly 85% of the stores are back open.

Approximately 90% of Nike-owned stores have been re-opened in Europe, the Middle East and Africa (EMEA), while 65% are open in Asia Pacific/Latin America (APLA).

Guidance

Nike pulled its financial forecast for fiscal 2021. Off the record, Donahoe predicts revenue for the period to be flat or to increase.

Disclosure: I do not hold any positions in the stocks mentioned.

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About the author:

Mayank Marwah
A seasoned writer with keen interest in the automotive, technology, telecommunication, retail and aerospace sectors.

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