The sports apparel giant released their earnings report on Tuesday. Here are some of the key figures to observe:
- Sales up by 6% in North America
- Revenue up by 10% to $9.95bn
- Profit increased by 15% to $1.1bn.
- Shares fell by 4% hours after the report was released
The Kaepernick advert
Nike has been looking to regain terrain in the US market from competitors like Adidas and Under Armour. With that objective in mind, and to celebrate the 30thanniversary of their “Just Do It” slogan, Nike featured the former San Francisco 49ers quarterback, Colin Kaepernick as the face of the campaign. The ads were released in early September, shortly after the end of Nike’s fiscal year.
The ad reignited the 2016 nationwide social debate, when the quarterback began kneeling during the national anthem at games. This was a form of protest against the police shootings of unarmed black men that had occurred across the country. Kaepernick’s position was strongly associated with the “Black Lives Matter” movement.
Reactions to the controversial campaign did not take long set social media afire with impassioned support and objection to the ad alike. Opposers of the campaign went as far setting their Nike apparel on fire and called for a boycott of its products. Nike shares fell 3% the day after the ad first aired.
As tempers cooled down in the weeks following the release of the campaign, analysts expected the controversial ad to add value to Nike and bump up their sales.
Regaining advantage at home
Nike has been fighting to regain a bigger slice of its domestic market. The latest marketing campaign is just one successful example of this effort to become more relevant to a younger and engaged demographic.
The brand’s investment in R&D is also starting to bear fruits. The new React trainers have spawned into a whole line of running shoes. The Jordan line has been revamped, offering new designs inspired by the original trainers, the apparel that started it all.
The quarterly report
The sports equipment giant boasted double digit growth in annual revenue, a 10% increase to $9.95bn. These figures beat even the most optimistic Wall Street estimates. Profit also outdid expectations, despite a weakening of margins due to increased commodity costs.
Given the strong figures reported, one could be left wondering the reason for the share dip. In addition to the concerns regarding the gross margins, there was disappointment in the conservative second-quarter guidance too. The Kaepernick effect is expected to have a significant positive impact in the next quarter’s figures. The lukewarm reaction to these factors translated to a 4% dip in shares in the hours following the release of the report.
From a broader perspective, the Oregon-based company has had a strong year. has outperformed its direct competitors with a 35% share hike this year.