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Nike’s 2020 earnings report… Recovery from the COVID-19 Pandemic

Nike's 2020 earnings report... Recovery from the COVID-19 Pandemic
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Nike reported revenue of $12.3 billion in the fourth quarter of last year, an increase of 21% compared to the same period last year. It added that its full year revenues increased 19% to $44.5 billion.

“Nike’s solid performance in the last quarter and full fiscal year demonstrates an unprecedented competitive edge and demonstrates its deep connection with consumers around the world. Fiscal year 2021 is important for Nike. This is because it is implementing a Consumer Direct Acceleration strategy across the market. We will continue to invest in innovative technologies and digital leadership to accelerate our growth and build the foundation for long-term growth,” said John Donahoe, Chairman and CEO.

“Nike’s brand momentum is a testament to consumer connectivity, digital strength and continued operational execution. As we are undergoing a consumer-led digital transformation, we are building a new financial model that can sustain sustainable and profitable growth over the long term,” added Matt Friend, Vice President and Chief Financial Officer of Nike.

Q4 Review
In the fourth quarter of last year, Nike recovered its business operations from the impact of COVID-19, generating a total of $12.3 billion in revenue. It also saw triple-digit growth in its wholesale business, and Nike Direct also posted double-digit growth. Converse, a subsidiary of Nike, also grew 85% to a total of $596 million, driven by strong market demand in North America and Western Europe.

According to Nike, “The revenue growth in the last quarter was attributed to higher wholesale exports due to the closure of offline retail stores related to COVID-19.” After that, even after brick-and-mortar retail stores reopened, Nike Brand Digital grew 41% year-over-year, driving revenue growth. Meanwhile, North America saw revenue growth, growing 29% compared to the fourth quarter of 2019. In addition, Nike Digital in North America grew 177% compared to the same period in 2019 as several sports events resumed along with the market. In the EMEA region, it grew up to 21% year-over-year, despite store closures due to COVID-19 throughout the fourth quarter. Digital in EMEA also grew 170% compared to the same period in 2019. Currently, 99% of offline stores in EMEA countries have reopened or are operating with reduced hours.

Gross margin also increased by 850 basis points to 45.8%, driven by lower factory cancellation rates, lost inventories, and favorable supply chain fixed-cost quotes for large wholesale exports. An increase in gross margin means favorable margins in Nike Direct’s business.

Net income also reached $1.5 billion, and earnings per share for the fourth quarter of 2020 were 0.93 compared to net losses.

Source: Online/KSU

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