Nike Inc (NYSE:NKE) Q3 2020 Earnings Conference Call - Final Transcript

Mar 24, 2020 • 05:00 pm ET


Nike Inc (NYSE:NKE) Q3 2020 Earnings Conference Call - Final Transcript


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John J. Donahoe

spread across China in late January, our top priority was to protect the health and safety of our teammates and our consumers. We immediately began closing stores. And as of 45 days ago, we had closed more than 5,000 stores in Greater China while the remaining open doors were operating with severely reduced hours. Not surprisingly, retail volume in China plummeted. But we acted quickly and decisively, leveraging our diverse sourcing base and digital capabilities to manage the business with flexibility and shifting our inventory to serve consumer digital demand.

At a time when people were confined to their homes, we moved swiftly to leverage our digital app ecosystem and NIKE expert trainer network to inspire and support consumers across China to stay active and connected while at home. As a result, our Nike Training Club workouts in China saw an extraordinary rise and sign-up and engagement. In fact, our weekly active users for all of our NIKE activity apps were up 80% by the end of Q3 versus at the beginning of the quarter. And here's what happened. The strong engagement of Chinese consumers with our activity apps translated into strong engagement with our NIKE commerce app. As a result, our digital business in China grew more than 30% and maintained strong momentum throughout this challenging period, a powerful statement of NIKE's agile problem solving in times of disruption.

Then approximately 30 days ago, we began to gradually reopen stores in China. People got back to work and retail traffic began improving significantly. Today, nearly 80% of our stores in China have reopened with more coming back online every day. In fact, just last week, we re-opened our first store in the Wuhan area and the results are encouraging. Our digital business in China has accelerated even further over the past months and we are now seeing double-digit increases in retail traffic week over week with some stores having already returned to prior-year levels. Credit for this response goes to Angela Dong, who leads our Greater China geography and her talented team of more than 1,600. I spoke with Angela two nights ago and she has been telling me about the positive sentiment consumers in China are feeling for NIKE and I can't overstate how impressed I am.

It's become quite clear to me that when NIKE says we are a brand of China, for China, it's really true. And it's no surprise to see the business already rebounding given the depth of our connection and the incredible strength of our local leadership team. So today, I can say that we're seeing the other side of the crisis in China. And due to the resilience and creativity of our team in China, we now have a playbook that we can use elsewhere.

In addition to Greater China, we've applied that playbook in Japan and South Korea over the past two months and we're seeing early momentum in those markets as well. And with COVID-19 now spreading across Europe and