Nike’s Corporate Playbook to Cope With Coronavirus Worldwide
Nike Has a Plan for Coping With Coronavirus Around the World
(Bloomberg) -- Nike Inc. doesn’t have a cure for coronavirus, but the company does have a plan for coping with the pandemic globally.
After delivering better-than-expected quarterly results late Tuesday, the sportswear giant’s top executives discussed their experiences dealing with the virus in China -- Nike’s top growth market and the place where the Covid-19 outbreak began. They expect the disruption and recovery seen in China to play out around the world, and want to be ready.
“One of the real advantages of Nike being a scaled global company is that we can extract learning and insights from each of our markets,” Chief Executive Officer John Donahoe said on a conference call. “And we’re looking at things through the lens of four phases.”
- In the first stage, which Nike calls containment, a country partly shuts down and stores close to stem the spread of the virus. That’s when Nike has to rely heavily on e-commerce to maintain sales. In China, online orders jumped 30% last quarter.
- Second is recovery, when brick-and-mortar stores begin to reopen. But sales remain sluggish.
- That’s followed by a return to normalcy, when store traffic and in-person shopping hits pre-virus levels.
- And the last phase is a return to full growth for Nike.
In China, for example, containment lasted five to six weeks, and at one point 75% of stores selling Nike products were closed. The country is now through recovery and returning to normal, Donahoe said. He expects the company’s sales in China to be flat next quarter, then resume their growth early next year. The shares jumped 9.1% to $78.83 at 10:18 a.m. in New York Wednesday.
“The data from China, Japan and South Korea was fairly consistent,” Donahoe said. “Now all three markets are through what we’re calling recovery -- that is, retail is opening back up -- consumers are back on the street. And as we move into normalization, retail traffic is coming back.”
Nike found that in China, digital sales increased as the stores started reopening. Donahoe said that bolstered the company’s belief that e-commerce and physical locations enhance each other.
Nike also is fighting the virus on another front. The company is exploring protective equipment for doctors and nurses, Donahoe said, prototyping face shields with Oregon Health and Science University.
“This is a moment in society where the private sector has a major role to play,” he said. “Companies like Nike need to do our part.”
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