John Donahoe took over as Nike CEO in January 2020.
Kim Kulish | Corbis via Getty Images
Nike is finally beginning to reopen stores in the U.S., but the company said Thursday it expects the coronavirus pandemic will still have a material impact on its business in North America, parts of Europe and Asia during its fiscal fourth quarter.
The athletic apparel and footwear maker said all of its owned stores and more than 95% of its partner stores in Greater China and South Korea are back up and running. It said traffic is “progressing” in those regions, however store traffic remains below prior-year levels. Nike said it sees “continued strong” demand from consumers online, offsetting some of those losses.
Its shares were up 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 connection to consumers,” Nike Chief Executive John Donahoe said in a statement.
“With our strong digital foundation, brand momentum and financial position, we believe this will be a catalyzing moment that strengthens 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 U.S. It said about 40% of its owned stores in its Europe, the Middle East and Africa region, 15% in its Asia Pacific and 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, it said.
Still, its business will take a hit, like its peers’. Nike said that because of the store closures, product shipments to its wholesale partners have stalled, resulting in “significantly lower wholesale revenue and higher inventory.”
On Monday, when Nike-rival Under Armour reported earnings for the quarter ended March 31, it said sales could fall upwards of 60% during the upcoming quarter. Chief Executive Patrik Frisk said the second quarter could be the most challenging yet, as demand remains constrained and Under Armour must use excess promotions to move product off the shelf.
When Nike reported its fiscal third-quarter earnings on March 24, the company said it was already starting to see signs of a recovery in China, where the virus originated. However, that was right as the U.S. economy was being pummeled. Nike announced it would be shutting all of its U.S. stores, to try to help halt the spread of Covid-19, on March 15.
Nike had 384 retail stores in the U.S., including Converse and its outlet locations, at the end of 2019, according to SEC filings. Internationally, it had more than 750 locations.
Nike said Thursday it is seeing increased traffic and engagement on its mobile apps and website, “partially offsetting” declines in its stores.
Nike has not yet offered a fourth-quarter outlook. The company is set to report earnings in late June.
Nike shares as of Thursday’s market close are down about 15% this year. The company has a market cap of $134.5 billion.
—CNBC’s Jessica Golden contributed to this reporting.