ANALYSIS: Nike gains momentum from the woes of others
Taking the figures in isolation, it appears that Nike president and CEO Mark Parker is indulging in a little pre-World Cup hype when he calls the company’s third quarter “great”.
Underlying profits inching up by 2%, accompanied by a 7% revenue rise, and the first time the company has recorded top and bottom-line growth for a while… Creditable, certainly. Good, probably. But great?
Dig beneath the headline figures and the reasons for Parker’s optimism become apparent, led by Nike’s latest futures orders for the March to July period.
Up 9% to US$7.1bn, these signal an all-but certain continuation of growth through the crucial World Cup trading period and beyond, leading Parker to argue that “Nike is more than a survivor in these tough economic times”.
The regional revenue breakdown also makes for happy reading, particularly a return to growth in North America, and a stronger than expected performance from Western Europe. Greater China and Japan remain predictably buoyant and gloomy respectively.
The rise in apparel revenues in North America highlights what Parker called “the single biggest opportunity for Nike”. He added: “We’re already one of the world’s largest apparel companies, but that’s nothing compared to what’s possible in this space.”
Potential is also the name of the game for the company’s other businesses, a sometimes ragtag collection of brands.
Back to Parker. “It all points to one word – momentum,” he told analysts. “While others froze or retrenched over the past two years, we never stopped moving.”
This far from subtle dig at Nike’s rivals is telling. Without wishing to diminish a strong quarter, the warm reception given to these results says as much about the fortunes of its rivals as it does about the Oregon-based company’s own figures.
Arch-rivals Adidas and Puma have recently reported relatively lacklustre results – and there’s nothing like the misfortunes of others to put a gloss on your own achievements.
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