Nike Announces A Substantive Impact On Re Opening The US Store Epidemic Business

Nike (NYSE:NKE) finally began reopening its stores in the United States. However, the company said on Thursday that the new crown pneumonia pandemic is expected to have a significant impact on its business in North America, Europe and parts of Asia in the fourth quarter.

The sportswear and footwear manufacturer said that all of its own stores and more than 95% of the cooperative stores in Greater China and South Korea have resumed operations. Nike said that the traffic of these regional stores is growing, but still below the same period last year. The company said consumers' online "continued strong demand" offset some of its losses.

(shooting: Zhongfu net)

"As we continue to deepen our contacts with consumers, we are greatly encouraged by the recovery seen in Greater China and South Korea," Nike CEO John Donaho (John Donahoe) said in a statement. "With our strong digital foundation, brand dynamics and financial position, we believe that this will be a catalytic moment to enhance Nike's long-term future." After the announcement, Nike's share price rose less than 1% in after hours trading.

Nike said the company has started reopening in more than 15 countries including Germany, France, Holland, Brazil and the United States. In addition, Europe, the Middle East and Africa have about 40% of its own stores, 15% of its own stores in Asia Pacific and Latin America, and 5% of its own stores in North America are now reopened, with some stores shortening their business hours. In addition, wholesale partners, including Department Stores operators, began to reopen.

Nevertheless, Nike's business will be hit like its peers. The company said that due to the closure of the store, the delivery of the wholesale partners' products had stopped, resulting in a sharp decline in wholesale revenues and an increase in inventories.

On Monday, Nike's rival Andemar released the first quarter earnings as of March 31st. Andemar said the company's revenue in the second quarter could fall by up to 60%. Patrik Frisk, chief executive of Andemar, said the second quarter is probably the most challenging quarter to date, because demand is still limited, and the company must use more promotions to sell its products. Frisk

When Nike released its third quarter earnings in March 24th, the company has indicated signs of recovery in the Chinese market. But Nike's US business was hit hard at that time. In March 15th, in order to prevent the spread of the new crown pneumonia epidemic, Nike announced that it would close all its stores in the United States.

According to the documents submitted to the securities and Exchange Commission, as of December 31, 2019, Nike has 384 stores in the United States, and has more than 750 stores in other countries. Nike said on Thursday that its application and website's traffic and participation are increasing, which partly "offset" the impact of reduced stores.

However, in a statement released on Thursday, Nike did not provide a fourth quarter performance outlook. The company plans to release its fourth quarter earnings by the end of June. Nike shares rose 0.62% on Thursday, closing at $86.55, with a market capitalization of about $134 billion 500 million. As of Thursday's close, the company's share price fell by about 15% this year.