Sports and fitness brand Nike saw its quarterly revenue decline by a stunning 38 percent as 90 percent of its stores remained shuttered across North America, EMEA and APLA for roughly eight weeks.
The company reported generating $6.3 billion in revenue in Q4, down from $10.2 billion the year before.
The company’s Q4 revenue was further impacted by decline in sales at its wholesale partner stores, which also remained closed during that period. The company said that product shipments to its wholesale customers fell by nearly 50 percent, which resulted in lower revenue and higher inventory.
Nike did, however, manage to offset some of the economic impact of the ongoing pandemic with fairly stable performance in the Chinese market and double-digit growth in its global digital sales. The company’s overall digital sales increased by 75 percent, with double-digit growth across all of its geographic markets. Nike’s digital sales accounted for 30 percent of its total revenue, the company said on its earnings call. The company had originally aimed for digital sales to reach that level by 2023
As the company seeks to navigate through the economic realities of the pandemic, it is planning to double down on its digital offerings and is even planning to experiment with smaller format stores.
“The global pandemic has made it clear that consumer behavior is changing rapidly, providing the opportunity for us to accelerate the pace of our transformation,” CEO John Donahoe said on the call. “Over the past few years, we have shifted from a legacy, wholesale distribution model to investment in a model that gives our consumers a more premium shopping experience.”
To that end, the company is planning to open nearly 150 to 200 smaller format stores in the next couple of years, which will draw inspiration from its Nike Live stores that are focussed on delivering personalized, omnichannel experiences.