Back-to-school season performance for Nike (NKE)
The first quarter of the fiscal year is an important one for Nike (NKE). The world’s largest athletic footwear company typically derives a relatively larger percentage of its sales from this quarter due to the back-to-school and back-to-college season, when sales to both school-going and college-going students shop for footwear, apparel, and other school supplies.
Athletic footwear industry performance
According to the NPD Group, in 1H15, dollar-value sales of athletic footwear in the US increased by 8%. Most of this increase came about via higher prices, which rose 7% YoY (year-over-year). In the comparable period of 2014, athletic footwear sales had risen by 1% for men and women, and by 11% for children. The industry saw traction in retro sneakers, running sneakers, and cross-trainers.
Market share leaders
Nike continued to lead in terms of market share among athletic footwear makers. The company had a market share of 58% (Nike and Jordan brands combined), compared to ~5% each for Skechers USA (SKX) and New Balance, and ~4% each for ASICS (ASCCF) and Adidas AG (ADDYY).
The Nike difference
Nike’s been able to raise both prices and volumes for footwear consistently in North America. In fiscal 2015, the company’s average selling prices and average unit sales for footwear rose by 8% and 6%, respectively. Its premium range, tendency to innovate, customization options through NIKEiD and digital presence are just a few of the differentiators contributing to the company’s strong pricing power.
New Balance has strengthened its performance as well. Primarily a footwear player, the company is also stepping into the “athleisurewear” space this year. Adidas’s sales in North America were flat in its last quarter, due to Reebok sales declining by 9%. (Adidas is in the middle of resetting its Reebok factory outlet business.)
Dow component Nike constitutes 4.7% of the holdings in the SPDR Dow Jones Industrial Average ETF (DIA). As a mega cap, Nike’s also part of the holdings in the iShares S&P 100 ETF (OEF), with 0.7% of the portfolio’s weight.
In the next part of this series, we’ll look with more detail at Nike’s strong prospects for fiscal 2016.