Let’s breakdown Nike’s net loss of $790 million and what it will mean for sneaker fans, employees and the company at large. For months, when discussing Nike, the news has been a mixed bag of hyped up releases and heart warming charitable acts. Especially with regards to COVID-19 and the pandemic. From their donation of Air Zoom Pulse to healthcare workers to their recent pledge of $40 million pledge alongside Jordans’ $100 million for Black Lives Matter, Nike has been extremely generous with its wealth. So, imagine the surprise at the close of the fourth quarter (March through May) Nike posted a net loss $790 million. For comparison, this time last year Nike earned $989 million.
What Happened?
Long story short: COVID-19. A combination of closed stores globally, stagnant warehouses, product cancellation and acclimating their digital market place gave Nike its biggest financial loss in years. Overall, footwear sales dropped 35 percent, apparel was down by 42 percent, while equipment sales registered the lowest dip at 53 percent.
Nike CEO John Donahoe relayed the quarterly loss in a company-wide email with the sobering news that it would “likely result in a net reduction of jobs.” An undisclosed number of layoffs are expected to happen in phases over the next few months. However, Donahoe stresses, “These decisions are exceptionally difficult because they impact friends and colleagues at Nike. You have my personal commitment that we will put people at the center throughout this entire process. We will support everyone impacted by this transition.”
What Does This Mean?
Is Nike going broke? Laughably, no. Despite these setbacks, the Swoosh still earned $6.3 billion with online sales increased 75%. Fittingly, expanding their online presence appears to be Nike’s next step. Donahoe explains, “Consumers want modern, seamless experiences, online-to-offline, so we’re accelerating our approach.” Will we see more cancellation like the SB Dunk 7-Eleven and AF 1 Low Puerto Rico? Probably, yeah. But, only time will tell. Until then, keep it locked to Yankeekicks for updates on what else might happen after Nike’s $790 million quarterly loss.
