Knight: Covid-19 one of Nike's 'toughest problems ever'
Phil Knight, co-founder and emeritus chairman of Nike, the US sportswear giant, has claimed that the ongoing chaos caused by the coronavirus pandemic has been “one of the toughest problems” the company has ever faced.
Nike made a huge loss for the second quarter, with all outlets in USA forced to temporarily shut.
On a podcast hosted by Sebastian Coe, World Athletics president and non-executive chairman at the CSM Sport and Entertainment agency, Knight said: “It’s as tough as any of the problems we’ve had… For our last quarter, Wall Street expected us to secure profit of $130 million, and instead we had a loss of $790 million.
“It hammered us and has been as tough as any crisis we've had to negotiate, although we do feel we’re coming back a little bit now.”
He added that in terms of sales, Nike is now “doing better than we did during our last quarter, that’s for sure.”
Out of close to 10,000 Nike retail outlets in the US, all were forced to close temporarily in March, and while many have now re-opened, over 3,000 are expected to have to shut completely, Knight conceded.
Additional hygiene measures that have been put in place in physical retail outlets, including social distancing, have also had an impact on sales, (although as a contrast digital sales rose by 75 per cent during the last quarter).
Nike did not permanently lay off any staff during the lockdown, according to Knight, who said: “We didn’t fire anyone during that time, because those are our values and we thought that would benefit us in the long run.”
However, last month the company did say that it would be making upcoming job cuts that would cost between $200 million and $250 million, while also restructuring its senior leadership team.
In addition to the loss of $790 million for the three months until the end of May this year, the firm’s revenue fell by 38 per cent to $6.31 billion during that time.
Unveiling the restructuring in early July, Nike president and chief executive John Donahoe said: “We are announcing changes today to transform Nike faster, accelerate against our biggest growth opportunities and extend our leadership position.”
Knight, who co-founded Nike (then called Blue Ribbon Sports) in 1964 and stepped down as its chairman in July 2016, also said that “we won’t really know the full impact on us until the smoke has cleared, which I’d suggest will only happen when a vaccine becomes widely available.
He added: “When we do get a vaccine, sport will return more popular than ever before, because of the huge appetite that has been built up."
The Extraordinary Tales in Extraordinary Times podcast featuring Knight is available now, from Spotify and Apple.