Athletic apparel and footwear giant Nike reported fiscal fourth-quarter earnings Thursday and while shares were up more than 1%, its performance fell a bit short of analysts' expectations.
Nike said its profit margins were hurt partly as a result of its efforts to sell directly to consumers and less through wholesalers, like Sports Authority, which recently filed for bankruptcy.
Its current share price is hovering around $83.
Although Nike's stock underperformed slightly this quarter, if you invested 10 years ago, that decision would have still paid off. A $1,000 investment made on June 27, 2009, would be worth more than $7,400 as of June 28, 2019, for a total return of over 640%, according to CNBC calculations. Over the same period, the S&P 500 has returned 290%.
"Nike has been a very strong, fundamental, quality story," Joe Terranova of Virtus Investment Partners, said on CNBC's "Halftime Report" last Friday. In fact, he said he's surprised the company hasn't been more impacted by the ongoing U.S.-China trade war.
CNBC: Nike stock as of June 28, 2019.
Nike's stock is up nearly 16% over the past year, bringing its market cap to about $130 billion. Revenues for the brand jumped 10% from the same quarter last year and is now at $9.7 billion. And Nike sold more gear during this quarter than Wall Street expected.
Plus, the retailer, perhaps best known for its work with famous athletes like Serena Williams and Colin Kaepernick, is already the biggest sneaker maker in the United States and ranks No. 14 in Forbes' list of the top 100 most-valuable brands in the world.
The shoemaker has struggled to grow U.S. sales as rivals – including Adidas, Lululemon and smaller startups – have started to chip away at its market share. And some experts worry about how the trade dispute could impact Nike's revenue.
More than 170 retailers – including Nike, Foot Locker, Ugg and Under Armour – penned a letter in May asking President Donald Trump to consider a halt on raising tariffs on Chinese-imported footwear. The Footwear Distributors and Retailers of America estimated the tariffs could cost shoe shoppers more than $7 billion a year.
Sales in the China region surged 22% this quarter, though, and Nike CEO Mark Parker said in a statement "the consumer sentiment around Nike in China has been quite strong."
Overall, the outlook on Nike is mostly positive. The company is opening new stores, offering new products, exploring new ways to sell directly to consumers and even creating a high-tech foot-scanning app that can accurately tell customers their shoe size.
"Our business momentum is being accelerated by our ability to scale innovation at a faster pace and expand new digital consumer experiences around the world," Nike CEO Mark Parker said in March. "The innovation pipeline is full at Nike, and it gives us great confidence that we'll continue to win with the consumers for years to come."
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