Sportswear firm Nike has seen a huge rise in online sales as it bounces back from a coronavirus slump, with digital sales rocketing 82% during the June to August quarter, offsetting falling revenue in its stores.
First quarter reported revenues were $10.6 billion, down 1% on a reported basis and flat to prior year on a currency-neutral basis. Nike Direct sales were $3.7 billion, up 12% and up 13% on a currency-neutral basis, with growth across all geographies.
It was online, however, where the real magic happened. Nike Brand digital sales increased 82%, or 83% on a currency-neutral basis, with double-digit increases across North America, Greater China and APLA and triple-digit growth in EMEA.
“Our results this quarter continue to demonstrate Nike’s full competitive advantage, as we strengthen our position in the midst of disruption,” says John Donahoe, President and CEO, Nike. “In this dynamic environment, no one can match our pace of launching innovative product and our Brand’s deep connection to consumers. These strengths, coupled with our digital acceleration, are unlocking NIKE’s long-term market potential.”
Nearly all of the Nike-owned physical stores have been open during the quarter across North America, EMEA and Greater China with approximately 90% of doors open in APLA. However, despite a majority of stores open in the quarter, the brand continues to experience year-over-year declines in physical retail traffic across the marketplace due to COVID-19 impacts and safety related measures, offset partially by higher conversion rates.
EMEA returned to growth of 5%, led by triple-digit growth in digital. Greater China revenue increased by 6% (8% on a currency-neutral basis), led by digital and Nike Factory Stores.
The company remains optimistic, however. “Nike is recovering faster based on accelerating brand momentum and digital growth, as well as our relentless focus on normalizing marketplace supply and demand,” says Matt Friend, Executive Vice President and Chief Financial Officer, Nike. “We continue to drive investment in capabilities that will fuel our consumer-led digital transformation, catalysing long-term growth and profitability for Nike.”
Commenting on the results, Michael Schirrmacher, UK MD at Bloomreach, says: “As we start to see the introduction of a second lockdown, physical stores will continue to struggle and online shopping will remain the most important channel. This is an ongoing trend our research study, conducted by Forrester, found that 90% of consumers have changed their behaviour as they try to avoid physical stores due to safety concerns and buy exclusively online where possible. While COVID-19 may have sparked this behaviour, these new habits and expectations will live on long after the crisis ends. Now that consumers have had a proper taste of the convenience, they are going to continue to use it.”
He continues: “Retailers need to ensure they are adapting to fit into the new normal and continue to increase investments in core digital commerce technologies, such as online channels like web, apps, social, and third-party marketplaces that impact great experiences and keep one thing in mind that this isn’t just an initiative to get through the pandemic.”
He concludes: “It is also interesting to see Nike invest so heavily in direct-to-consumer (DTC), which is another trend that has been accelerated by COVID-19. Many brands are very focused on DTC due to the ongoing struggles of their wholesale accounts — retailers. There is a need for brands to control the relationship with the customer and drive their business without being beholden to an increasingly challenged model of wholesale-retail. The benefits of D2C are clear in increased margins, as well as having the customer relationship and data that gives them control over their future. This is a trend that looks set to continue.”