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Journalist by profession. I have been writing for various publications for seven years. I have also taught for two years. My interests lie in the business sector, and I also like to cover the fashion industry. I analyze, research and write feature pieces and comprehensive stories regarding business.
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  • Nike On The Roll 0 comments
    Oct 24, 2013 5:22 AM | about stocks: ADDYY, NKE

    Nike experienced revenue growths of 16%, solely because of its footwear brand, Converse. Nike's footwear segment collaborates to a major chunk if the brand's stock price, i.e approximately 40% YTD. Its footwear stands at a 57% of its total revenues. The company's major markets are Europe, China, and America, with 41% of its total revenues coming from North America. Nike's shares went up over 6.5%, right after the company announced its earnings of $0.9/share for the first quarter of FY14.
    Together with that, Nike has a strong position in the emerging markets, with a total of 15% of Nike's revenues coming from these. Emerging markets have contributed to 22% of the annual growth of Nike.
    With the basketball footwear category evolving at a rapid rate, Nike's revenues are all set to reach the sky. Considering Nike's Jordan alone stands for 58% of the US basketball footwear industry, one can see new doors opening. Basketball footwear makes up for 24% of the revenues, and since its market share has increased by approximately 3%, Nike is all set to reach further profits. Orders for Nike's products experienced an increase of 10% in August 2013.
    The NIKE and Jordan brands gained 3.3% share in the market last year. Together with that, Nike's order backlog increased up to $12 billion in May this year. This goes to show that Nike is producing innovative, stylish and quality products, and it is only getting better.
    During the fiscal year 2015, Nike is expected to reach an increasing gross margin by 100 basis points, i.e about 50%. The reasons for this are clear. Adding to Nike's revenues is the decline in the costs of raw materials. Synthetic rubber has experienced a decline of 13% on the price scale in fiscal year 2013, giving way to an increase in Nike's gross margins and direct-to-customer sales, which increased up to 10 basis points, and 2.2% respectively. Together with that, DTC sales will undergo a boost of 15% every year over the next five years. This good news for Nike, as the DTC sales went down to 20%. Hence, Nike will be making it bigger than it already is.
    The National Football League signed a sponsorship contract with Nike, through which Nike can market its products via the thirty-two teams. Together with that, British athletes will market Nike's products in the 2017 World Championships in Athletes, given Nike's recent UK athletic team sponsorship contract remains consistent.
    The fact that Nike's revenues are going to shoot up due to the 2014 FIFA World Cup and the 2016 Rio Olympics in Brazil is crystal clear. One can see Nike's total revenues experiencing a major boost within the next couple of years, with the 2014 FIFA World Cup playing the biggest part. From what I analyze, Brazil is the land of opportunities for Nike. Brazil is big on games, with soccer being the most popular. Nike can easily expand its revenues there, as it is a country of sports. Nike has reached the skies, and we can see the brand making its way to the stars.
    However, an in-depth market analysis raises many questions in my head. As statistics suggest, emerging markets are driven by price. Affordability, together with quality, are the prime factors in such markets. Therefore, could a competitor stand up against Nike, with innovative, affordable and durable quality products, in the near future? Can there possibly be a much more affordable, yet quality driven, alternative to Nike? Will the consumers and major football leagues, in the near future, invest in an upcoming brand providing the same promise as Nike, at a much affordable rate? Consider the examples of the smartphone industry. Consumer preferences are driven by quality and price, with various varieties to choose from. Could there be many varieties to counter Nike? This makes one wonder what the future holds. It would be interesting to sit back and watch. As for now, Nike is on the roll, and there is no denying it.

    Stocks: ADDYY, NKE
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