During Nike’s (NKE) Q3 earnings call on Tuesday, the Swoosh brand’s president and CEO John Donahoe said that its actions amid the COVID-19 pandemic will allow the company to emerge even stronger. For Nike, returning to some semblance of normalcy in China was the first step.
Greater China was on pace to deliver another quarter of double-digit revenue growth for Nike before the spread of COVID-19 began in China in late last year. But by February 4, Nike had closed more than half of its stores in China and went on to temporarily shutter its stores in the U.S., Europe, and other parts of the world.
The brand’s gradual reopening of its retail locations in China has been ongoing the past 30 days as part of what the company is calling its “COVID-19 playbook.” Nearly 80% of Nike’s stores are now open there, and the company plans to reopen its stores in North America on a location-by-location basis as it monitors the virus.
“I can say that we’re seeing the other side of the crisis in China. And due to the resilience and creativity of our team in China, we now have a playbook that we can use elsewhere. In addition to Greater China, we’ve applied that playbook in Japan and South Korea over the past two months, and we’re seeing early momentum in those markets as well,” Donahoe said.
“And with COVID-19 now spreading across Europe and the U.S., we are applying the same playbook. We have prioritized the health and safety of our teammates, and we have closed our stores. Over the weekend, we drove a strong digital marketing campaign to engage consumers across Europe and across the U.S. to stay healthy and connected while they’re at home. And our digital commerce remains open and in growth mode, supported by our teammates in our distribution centers.”
Despite an uncertain future, many analysts believe that the company still sits in a position of strength.
Nike’s stock surged after its Q3 earnings were announced yesterday, topping consensus expectations for revenue, bringing in $10.1 billion vs. $9.55 billion expected. Digital sales led the way and remained the company’s fastest-growing channel, growing 36% on a currency-neutral basis.
“The 3Q20 results demonstrate NKE’s agility. The impact from the coronavirus in China was more muted than anticipated, and business there has begun to normalize,” said analyst Sam Poser of Susquehanna International Group, in a note titled “Swoosh at the End of the Tunnel; Stay Positive.”
“While COVID-19 will pressure 4Q20 results in North America and EMEA [Europe, the Middle East, and Africa], NKE’s digital prowess and ability to manage through the virus in China is likely a good proxy for how the recovery will take shape in North America and EMEA.”
Reggie Wade is a writer for Yahoo Finance. Follow him on Twitter at @ReggieWade.