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Nike's prognosis for the near future is grim

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Miguel A. Rodriguez
Miguel A. Rodriguez
14 September 2020
After a disappointing first quarter, the future doesn’t look too bright for Nike

Not only the hospitality or travel were struck by the pandemic, but fashion/sports gear as well, as the physical stores are closed and shopping moved online.

One of the affected brands by this is Nike. As it presented the expectations for the upcoming quarter, it stated that the closure of stores around the world would impact retail and wholesale, even though the online demand increased during the last quarter by 36%. Now, only 5 to 40% of Nike stores are open across the world. 

For the previous quarter, Nike reported a net income contraction, total came in at $847 million compared to last year’s $1.1 billion. The direct-to-consumer business had an increase of 13%. In China alone, online demand was higher than 30%. 

Since the containment measures started to ease in China, all stores from there are open, and in South Korea, more than 95% of stores work with reduced hours.  Still, foot traffic is below the normal levels set before the pandemic.

Also, with reduced hours, 40% of European, Middle East, and African stores are open, 15% in the Asia Pacific and Latin America regions, while in the U.S., only 5% out of 384 stores are functional.

After the announcement, Nike’s stock price gained less than 1%. Overall, the stocks are down approximately 15% this year. 

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Sources: reuters.com, marketwatch.com


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Miguel A. Rodriguez
Miguel A. Rodriguez
financial_writer

Miguel worked for major financial institutions such as Banco Santander, and Banco Central-Hispano. He is a published author of currency trading books.