Nike shares fell after hours as the sporting goods retailer lost a surprise in its fiscal fourth quarter amid store closings as a result of the coronavirus pandemic.
Nike (ticker: NKE) said it lost 51 cents a share in revenue that fell 38% year-over-year to $ 6.31 billion. Analysts were looking for earnings per share of 4 cents in revenue of $ 7.29 billion.
Digital sales increased 75% in the quarter (or 79% based on neutral currency), with Nike reporting double-digit increases worldwide. Online sales represented 30% of total revenue in the quarter. However, gross margins fell 8.20 percentage points, even with fewer discounts, due to supply chain disruptions and related costs.
Nike shares closed higher in regular trade and have bounced back even over the year, putting them well ahead of the S&P 500, if not some of its sport-focused peers.
Expectations were certainly high before the report, creating a difficult barrier for Nike to clear. Analysts warned that the quarter may show some coronavirus-related weakness, but that did not stop them from raising their price targets left and right ahead of the report.
While headwinds will continue, most have been willing to bet that there will be more than enough catalysts to offset. A positive aspect of the coronavirus pandemic has been people’s willingness to refocus on their health (and exercise) and to have an appetite for spending on expensive equipment.
Nike entered the pandemic on a solid basis, because it has long been investing in its online presence and reaching consumers directly. That has led many to believe that he will emerge from the crisis as an even stronger player.
That said, while investors were probably ready to overlook Nike’s quarterly numbers given the pandemic, the loss per share was a notable surprise, and sales were nearly $ 1 billion lower than expected.
The stock fell 3.7% to $ 97.70 around 4:45 pm ET.
About 90% of Nike stores are open worldwide, and retail traffic has improved week after week, with higher sales conversion compared to the previous year period, encouraging words for investors. The company generally provides guidance on its conference call, but had said it would suspend its forecast, as companies have done due to uncertainties created by the pandemic.
Write to Teresa Rivas at [email protected]