Asked by Anonymous
Asked on 11 Apr 2019
1.Beautiful long term growth history. 2. The youth love Nike and they are growing more and more each day in various sporting disciplines, everybody loves their apparel and on the shoe side of things they print money. How safe would you say Nike is? Do you think they have reached their full potential?
Quote from Mark Tepper, President and CEO of wealth management firm Strategic Wealth Partners- “They’re resilient, and when you have an iconic brand, it can command a premium valuation.”
Saw this sneaker chart on Yahoo Finance. Not sure if its the most accurate of the lot. If I am not wrong Footlocker is not exactly a brand of their own and does alot of brand resales. But from this we can see Nike still commands a pretty significant market share for sneakers. Would be good if there was one for different categories of footwear and see where all the brands stand in comparison, especially luxury end of footwear.
Nike stock just went up ~1% from Tiger Woods victory. Pretty impressive considering I dont even think Nike has a strong golf apparel and footwear focus. Given recent Kapernick and Zion Williamson's broken heel, Nike's stock seems to be increasingly more sensitive to random headliners- something which would increase the volatility and risk of the stock. Major Sentiment shifts in footwear industry- from what brands popular celebrities are seen supporting seem to drive alot of the customer preferences.
So while Nike historically has been producing good returns and enjoying dominant market share, I would say consumers today are more fickle and hype chasing. To stay ahead of the game means going to where others are not. Therefore its strong history might not necessary correlate to further brand loyalty.
TLDR there is no ability to predict whether Nike has hit their full potential but definitely I believe there still exists some strong brand loyalty today but might not necessary continue should major shifts in trends occur as youths increasingly value differentiation.
Thought this was also an interesting report from Statista.
With annual footwear sales of $22.3 billion, Nike is still number 1 in the global sneakers market. Having started as an enterprise licensing Japanese running shoes for the American market, Nike quickly developed a name of its own in the 1970s when some of the company’s most iconic silhouettes were introduced.
Showing how Nike is still dominating the footwear market today.
Nike is a mature company, and its stock seems to be hitting all-time highs. You can consider it for investment. more info - https://investorplace.com/2019/04/nike-stock-long-term-portfolio/
Same goes with Adidas too. It is also a mature apparel company offering attractive price for 2019. Its P/E ratio is also much more reasonable, and it pays a better dividend than Nike. It can also be a sound investment in 2019.