By Khadeeja Safdar
Nike Inc. said business has rebounded in China following the outbreak of coronavirus, and the sportswear giant was able to offset much of its lost retail sales with online orders, a strategy executives said they expected to follow in the U.S. and Europe.
"We are seeing the other side of the crisis in China," Chief Executive John Donahoe said on an earnings conference call Tuesday. "We now have a playbook we can use elsewhere."
Nike sales plunged when many stores in China closed in February but demand jumped online, Mr. Donahoe said. Roughly 80% of the 7,000 stores that sell its products have reopened in the country. Nike recently reopened one of its stores in Wuhan, the city where the outbreak first emerged. He said the company is also seeing early momentum in South Korea and Japan, two other countries where the virus prompted temporary store closures.
Shares of Nike, which had tumbled roughly 30% in the past month along with the broader market, rose 10% in after-hours trading to $79.55.
The rapidly spreading coronavirus has prompted Nike and dozens of other retailers to close their stores, governments to limit travel and many shoppers to stay home. Professional sports leagues have been suspended and on Tuesday organizers said the Tokyo Summer Olympics would be postponed.
Mr. Donahoe cited the strategy in China to explain how Nike will recover sales in other parts of the world. He said Nike closed its stores in China immediately and doubled down on digital sales as consumers were confined to their homes. The pivot helped Nike accelerate sales through its apps and website. Eventually it reopened stores, foot traffic returned and digital sales remained strong as well.
"We expect the next several weeks to be a challenging period for those living in the U.S. and Europe," he said, but the company's experience in Asia "gives us confidence we will see the other side of this crisis in the near future."
Mr. Donahoe said Nike would continue to pay its workers during the store closures. The sneaker giant is also designing personal protective equipment for doctors and nurses, including face shields, he said. "This is a moment in society where the private sector has a major role to play."
Executives said Nike would reopen U.S. and European stores on a location-by-location basis. They said online orders have surged in these markets in March as retail stores have shut. Andy Campion, Nike's finance chief, said online sales in the U.S. this week were comparable to the peak holiday season.
Nike's latest financial results cover the three months ending Feb. 29. They capture the economic slowdown in China, where the new coronavirus first emerged, but not the company's decision to close on March 16 most of its stores outside China, South Korea and Japan.
Digital sales rose 36% across the globe, including a 30% gain in Greater China in the third quarter.
Nike said Greater China sales fell 5.2% to $1.51 billion as a steep sales decline in February wiped out double-digit growth in the first two months of the quarter. Overall, the company said, quarterly sales rose 5% from a year ago to $10.1 billion.
Revenue in Nike's North American market, which accounts for the majority of total sales, rose 4.4% to $3.98 billion.
Mr. Campion said the company expects Greater China sales to be flat in the fourth quarter compared with a year ago and are on track to return to growth in the next fiscal year. Executives said they wouldn't provide specific financial targets for the fourth quarter or fiscal 2021.
For its third quarter, the company's profit was $847 million, down from $1.1 billion a year earlier. The latest results included a $400 million charge to transfer its Nike brand business in Brazil and several other South American countries to distribution deals.
--Kimberly Chin contributed to this article.
Write to Khadeeja Safdar at firstname.lastname@example.org