According to Forrester Research, hurt by the closures of its department and retail stores due to the COVID-19 lockdowns, Nike Inc has reported its first quarterly loss in more than two years. The brand’s wholesale business, through which Nike sells merchandise to other retailers, came to a halt amid the health crisis. This led to a 50 per cent fall in shipments, increased inventory and higher costs due to order cancellations.
As a result, gross margin of the brand fell by 820 basis points in the fourth quarter. However, Nike’s investments in its digital platform over the years helped it to record a 75 per cent rise in online sales, as many consumers shopped for activewear and sneakers from the comfort of their homes.
The company is now accelerating focus on its online presence, and expects its overall business to reach 50 per cent digital penetration. Online sales accounted for 30 per cent of total revenue in the quarter.