Nike plans to open 150 to 200 Nike Live-style stores over next couple of years

Nike remains focused on growing its brand even as it swung to a big quarterly loss in its fourth quarter amid the COVID-19 crisis.

The athletic footwear and apparel giant reported a loss of $790 million for the quarter ended May 31, compared to income of $989 million in the year-ago period.

Revenue fell 38% to $6.3 billion as the majority of Nike’s stores in North America and around the world were closed due to the pandemic. (Currently, about 90% of Nike-owned stores are open across the globe and retail traffic continues to improve week-over-week with higher conversion rates as compared to the prior year, Nike stated.) 

Digital sales in the quarter rose 75%, representing about 30% of total revenue. Nike had previously set a goal to reach 30% digital sales penetration by 2023. Given the recent growth, Nike president and CEO John Donahoe has set a new goal to make e-commerce sales to account for 50% of overall sales "in the foreseeable future,” he said on the company’s earnings call with analysts.

Donahoe also told analysts that Nike is planning to open 150 to 200 small footprint, digitally-enabled stores in North America, the Middle East and Africa.

“We've been testing this format with Nike Live and have a great understanding of how to best deliver this experience and so we will proceed ahead this year with more test-and-learn examples of it and scale it through the next couple of years,” he said.

Nike piloted the Nike Live concept, which is focused on localization, personal service, digital integration and convenience, last July, on Melrose Avenue in Los Angeles, and has since added two additional locations: Long Beach, Calif., Tokyo and Glendale, Calif. The format uses data science and consumer insights to meet the needs of local shoppers, specifically the members of Nike’s NikePlus loyalty club. 

“In the first half of the year we intend to shift two Nike-owned doors in New York to the live concept,” Nike CFO Matthew Friend said on the call. “And as we've continued to test the concept, we've been testing the assortment. We've been testing member engagement and we are seeing that members engage more. This is why we see this [Nike Live]as being a catalyst to digital growth, having local stores that members can engage with.”