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Nike to lose $3.5 billion USD amid Coronavirus outbreak

But it still decided to donate 15 million to fight the pandemic

Nike to lose $3.5 billion USD amid Coronavirus outbreak But it still decided to donate 15 million to fight the pandemic

UPDATE 18/03: Despite the crisis that is expected in the coming months following the closure of stores and the decline in sales, Nike has still decided to donate 15 million dollars to a number of charities in Oregon to counter the coronavirus pandemic. The beneficiaries are the Oregon Food Bank, the Oregon Community Recovery Fund and The Oregon Health & Science University, as well as the COVID-19 Solidarity Response Fund.

The complete stop to which the COVID-19 pandemic has forced clothing brands will cause heavy economic consequences, of which only now we begin to make estimates and projections.

One of the least encouraging estimates and one that gives a measure of how even the biggest and most famous brands are affected by the crisis is the one about the losses that Nike will face. The sportswear giant had to close its stores, discontinue retail chains and has seen this year's NBA season suspended. The projections speak of a possible 34% decline in revenue for Nike, which according to Woozle Research could result in monetary damage of 3 and a half billion

John Kernan, an analyst at Cowen & Co., highlighted to Business of Fashion the problems the Beaverton company faces in the domestic market:

Mall traffic may cease in coming weeks and fixed costs and future inventory markdowns create an almost impossible modelling exercise globally. 

Effects already visible now, with data showing a 21% drop in global sales and 16% in the value of equities. The CEO of the RevTrax marketing platform, Jonathan Treiber, has instead equated the sportswear sector with that of tourism transport with these words:

There are parallels between the coronavirus impact on Nike and other brands from the cancellation of major sporting events with the impact on travelcompanies from the US travel ban. 

The crisis obviously affects the entire industry and not just Nike. Rival adidas estimates that in the first quarter of the year it will suffer a loss of one billion euros in the sales sector and only relative to the Chinese market, with projections estimating further sales declines of 10% across the global market. It's difficult to calculate how a possible recovery will take place without knowing how long the emergency will actually last and what the global economic scenario will take on at the end of the pandemic.