Nike Swings to 4th-Quarter Loss Due to Store Closures

Nike, the athletic-shoe and -apparel icon, swung to a fiscal-fourth-quarter loss because of the impact of coronavirus-related store closures.
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Nike  (NKE) - Get Report swung to a fiscal-fourth-quarter loss on 38% lower revenue as the sports-shoe and -apparel company was forced to close stores during the pandemic.

For the quarter ended May 31 the Beaverton, Ore., company reported a net loss of 51 cents a share, compared with net income of 62 cents in the year-earlier quarter. Shares outstanding fell 3.2% to 1.56 billion.

Revenue was $6.31 billion against $10.18 billion a year earlier. 

Analysts surveyed by FactSet were expecting the company to report a GAAP loss of 8 cents a share on revenue of $7.3 billion. 

At last check Nike shares were trading 3.5% lower at $97.90. They closed the regular Thursday session up 1.3% at $101.40.

Digital sales rose 75% in the quarter and accounted for 30% of total revenue, Nike said.

Across North America and the Europe-Mideast-Africa and Asia-Pacific-Latin-America regions, some 90% of Nike-owned stores were closed for roughly eight weeks in the quarter in response to the coronavirus, the company said in a statement.

As of now 90% of its stores worldwide are open: some 85% are open in North America, 90% in EMEA, and almost all in Greater China. In APLA 65% are open or operating under reduced hours.

Fourth-quarter gross margin narrowed by 8.2 percentage points to 37.4%. Higher full-price average selling prices were more than offset by higher product costs, bigger reserves for obsolete inventory and other factors.

Selling and administrative expense fell 6% to $3.2 billion, including a $178 million increase in bad-debt expense, Nike reported.

Demand-creation expense - advertising and promotion - dropped nearly a fifth to $823 million "as retail and brand marketing [spending] was shifted as sporting events were canceled or delayed due to covid-19," Nike said.

Nike did not provide guidance for the fiscal first quarter, but Wall Street, via the FactSet survey, is expecting a GAAP profit of 45 cents a share on revenue of $9.71 billion.