(ATR) Nike co-founder Phil Knight elaborates on the mega shoe and sportswear company’s fourth quarter loss of $790 million due to Covid-19 in a new podcast with Sebastian Coe.
Phil Knight, CEO of Nike (Nike/CSM)
“Wall Street expected us to have a profit of $130 million and we had a loss of $790 million – that’s a pretty big difference,” Knight tells Coe on the World Athletics president’s "Extraordinary Tales in Extraordinary Times" podcast.
“It hammered us in that quarter, but we feel we’re coming back a little now,” he said of Nike’s fourth quarter, which ended on May 31.
Knight noted that Nike had 10,000 retail accounts in the U.S. market as of February, almost all of which were closed the following month due to the pandemic.
“I would expect, that while they’re starting to re-open, there probably will be at least 3,000 that will never re-open, so that’s a big change,” Knight said.
Despite the massive financial hit and closure of retail outlets with re-openings in question, Knight says that no employee of Nike has either been fired or laid off, citing the Oregon-based juggernaut's ethos and core values.
“We’re kind of a 56-year overnight sensation – we have 80,000 employees now and basically during the coronavirus a lot of them couldn’t work,” Knight, the chairman emeritus of Nike, tells Coe. “We didn’t furlough or fire anybody in that process because we felt that those were our values and it would pay off in the long run.”
Sebastian Coe hosts the "Extraordinary Tales in Extraordinary Times" podcast. (ATR)
Coe, the non-executive chairman of CSM Sport and Entertainment, a sports marketing agency which released the podcast on Soundcloud, Apple and Spotify on Tuesday, asked the Nike entrepreneur if Covid-19 is the toughest period that he has navigated the business through.
“It’s different and it’s certainly as tough as any of them,” the 82-year-old Knight responded. “We sit here today in the United States and it started in late February, and we sit here, it’s late July and we still don’t know what it is.
“Nobody really in the United States that I can see, including the greatest scientific minds, really has their arms around the understanding of what this is and how long it’s going to last.”
“There’s a lot of conflicting advice and they just don’t understand what it is.”
Knight, a former middle distance runner at the University of Oregon who co-founded Nike with his track coach Bill Bowerman in 1971, agrees with Coe, a Nike sponsored athlete during his running career, that the delivery of sport has been profoundly changed. However, with optimism for a vaccine, he believes the crisis will ultimately have a positive, game-changing effect on sport.
“What really concerns me are we going to have an Olympic Games - having said that I am optimistic because I do think this vaccine is coming, and I do think when we get the vaccine, sport will not only come back to normal, but it will be bigger than ever,” Knight surmises. “There is a huge appetite for some kind of sport and when it finally returns, it will be more popular than ever, in my opinion.”
Alberto Salazar (Wikimedia Commons)
Despite a wide-ranging interview that lasts nearly 39 minutes, there is no mention of the Nike Oregon Project and embattled distance running coach Alberto Salazar, who was banned from the sport for four years by the United States Anti-Doping Agency (USADA) last September. Among the charges levied by USADA were possession and trafficking of testosterone.
Nike’s involvement in the Oregon Project was a major part of the USADA report. It cited repeated instances in which a Houston endocrinologist Jeffrey Brown briefed former Nike chief executive officer Mark Parker on medical experiments, overseen by Salazar, to determine what the effects were of performance enhancing drugs and to what extent substances could be used without being detected. Brown was also banned for four years by USADA.
The Court of Arbitration for Sport will hear appeals from Salazar and Brown in November in their bid to overturn the suspensions. Both have denied any wrongdoing.
No athletes with the Nike Oregon Project were found to be involved with doping by USADA during its six-year investigation.
Despite a myriad of challenges and controversies, Knight remains bullish on Nike’s continued growth and profitability rebounding from Covid-19.
“We're selling $40 billion worth of shoes and clothes a year and the next job it to try to get to 80 over the next five or six years,” he said.
Coe concluded the podcast by citing Knight’s own succinct words summarizing Nike: “It all worked out OK.”
“I think that’s probably the great American understatement,” Coe said.
The podcast is available here.
Homepage photo: Nike
Written by Brian Pinelli
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