Nike chief predicts worst of virus crisis over in ‘near future’

Europe and the US will be over the worst of the coronavirus crisis “in the near future”, Nike’s chief executive John Donahoe has predicted after the sportswear company said it had reopened most of its stores in China.

The footwear and clothing group, which shut three-quarters of its outlets in greater China at the peak of the country’s coronavirus crisis in February, on Tuesday disclosed that about four out of five of its 7,000 stores in the region were now open.

Nike’s update, which sent its shares up 8.5 per cent in after-hours trading, offers at least some hope that other economies brought to a standstill by the pandemic will be able to get back on their feet in coming months.

The company has closed all its owned stores in several other countries, including in the US, Canada and western Europe, as authorities around the world impose restrictions on discretionary retail to control the outbreak.

Mr Donahoe, who took charge of Nike this year, said in a call with Wall Street analysts that he expected a “challenging period for those living in the US and Europe”. However, he added: “Our experience in China, Japan, and South Korea gives us confidence that we will see the other side of this crisis in the near future.”

He cautioned, however, the company expected the virus to develop “on different timelines” in different countries, in part because of varying measures being taken to deal with the outbreak.

Revenues from greater China dipped just 4 per cent in the three months to the end of February, its fiscal third quarter, although the decline would have been steeper without ecommerce and digital. Users of Nike’s exercise apps in China jumped 80 per cent in the period.

Andrew Campion, chief financial officer, added that he expected revenues from Nike’s greater China division to be “roughly flat” in the fourth quarter now under way, compared with the same period a year ago.

Nike began reopening stores in China about a month ago, and reopened its first in Wuhan, the city that was the centre of the outbreak, last week. 

Global revenues for the company’s fiscal third quarter rose 5 per cent across the group to $10.1bn. Net income fell from $1.1bn to $847m due in part to a non-cash charge arising from a change to distribution in South America.

The after-hours rally in Nike shares followed a 15 per cent jump in the New York trading day. They are still down 23 per cent for the year.

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