Trader Talk

Nike "Runs Away" On Global Growth


Nike beat estimates and had impressive growth globally--50% increases in sales in China! Nike is typical of the new breed of truly international companies: International sales are now 60% of total sales.

Still, with a slowing retail environment in the U.S., additional gains will be tough to come by here. Revenues in the U.S. region grew by only 2% during 1Q 08. : Nike's products, while high quality, are also comparatively higher priced compared to many lower-profile competitors.

To their credit, Nike is trying to move from their traditional base of basketball and into soccer and running shoes, and expanding into sportswear in general.

Finally, those of you wondering just how profitable the sneaker business is, consider this: according to Susquehanna Financial, the Nike Air Force One shoe costs Nike about $6 to make in China; they then sell it to retailers for $59, then retailers sell it for $90.

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