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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


This information/research prepared by Miguel A. Rodriguez does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views and consequently any person acting on it does so entirely at their own risk.The research provided does not constitute the views of KW Investments Ltd nor is it an invitation to invest with KW Investments Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.The research analyst in not employed by KW Investments Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation, or particular financial needs before making a commitment to invest. The laws of the Republic of Seychelles shall govern any claim relating to or arising from the contents of the information/ research provided. 

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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.