US sportswear manufacturer Nike reported better-than-expected results for its fiscal third-quarter ending on February 29. The company attributed the high numbers to a boost in its digital business and overall growth in North America. Its online sales also managed to offset its decline in revenues in the Chinese market, which was heavily affected by the coronavirus epidemic during the first two months of this year.
For its fiscal third-quarter, Nike reported total revenues of $10.1 billion, a 5 percent increase compared to the $9.6 billion it reported over the same quarter last year. The company's direct-to-consumer business had increased by 13 percent, while its digital sales were up by 36 percent for the quarter.
Despite reporting an increase in sales, Nike's total earnings still fell due to the ongoing coronavirus epidemic. The company's net income for the period decreased to $847 million from the $1.1 billion it reported over the same period last year. Total earnings were also affected by expenditure related to the company's transitioning businesses in Chile, Uruguay, Argentina, and Brazil.
Revenues for its business in North America had climbed by 4 percent for the quarter, driven mainly by its strong footwear and apparel lineup. Sales numbers for its Converse brand had also increased by 9 percent during the period. Following the release of its earnings report, Nike's shares prices jumped by nearly 9 percent in premarket trading on Wednesday.
Nike CEO, John Donahoe mentioned in a statement that they are seeing some "recovery" in their business in China. During the epidemic, Nike was forced to temporarily close down some of its stores across the country. For the quarter, Nike saw a 5 percent drop in its sales in Greater China, the first drop following 22 consecutive quarters of double-digit growth.
Donahoe added that almost 80 percent of its stores in China are now back in business. The temporary closures of its stores in the previous months had also resulted in a triple-digit growth in its digital sales in the region. The executive explained that they will be applying the lessons they had learned in China to other countries such as Europe and South Korea.
While China is slowly recovering from the spread of the epidemic, other countries are still coming to grip with its devastating effects. Nike announced during the weekend that it would be shutting down all of its stores in newly hit countries, including those in Western Europe, Australia, Canada, New Zealand, and the United States. The company plans to reopen its global stores on a "location by location basis. "