Cramer attributed the strong performance to smart strategizing and execution from Nike. The company made big investments in market and infrastructure, in addition to reorganizing its product lines around sports categories, and those strategies are paying off. Now, after a two-year pause during the recession, business is picking up and the stock is, according to Cramer, “poised to break out to new highs over the next few quarters.”
But while Nike sets the standard for execution, Finish Line falls far short of it. The company missed Wall Street’s consensus estimate of 31 cents a share in earnings by 5 cents on disappointing sales that were up only 0.8% from the year before. The killer here was a lack of inventory going into the quarter, Cramer said, leaving FINL sold out of the light-weight running shoes that were so in demand. And factory supply constraints and transportation delays made it impossible to restock.
“The takeaway from the quarter is that the category’s still very strong,” Cramer said, “but consumers will just go elsewhere if they can’t get the products they want at any given store.”
Therefore, Nike is still a buy. And if you want to own one of its retailers, consider Foot Locker instead of Finish Line. FL doesn’t suffer from Finish Line’s execution issues, and it offers a nice 4.2% dividend yield.
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