Why Did Nike Update Its Nike+ Run Club App?

Nike (NKE) has a market cap of $95.6 billion. It fell by 0.41% and closed at $58.66 per share on August 22, 2016. The stock’s weekly, monthly, and YTD (year-to-date) price movements were 3.3%, 3.4%, and -5.6%, respectively, on the same day.

Nike is trading 4.5% above its 20-day moving average, 5.2% above its 50-day moving average, and 1.0% below its 200-day moving average.

The iShares Russell Top 200 Growth ETF (IWY) invests 1.2% of its holdings in Nike. IWY tracks an index of US large-cap growth stocks selected from 200 of the largest US companies by market cap. IWY’s YTD price movement was 5.3% on August 22.

The market caps of Nike’s peers are as follows:

• VF Corporation (VFC) – $26.8 billion
• Under Armour (UA) – $17.4 billion
• Skechers USA (SKX) – $3.9 billion

In a press release on August 22, 2016, Nike reported, “Nike Inc. (NKE) today launched a significant update to its popular new Nike+ Run Club app, which gives athletes access to a new adaptive coaching feature, expert guidance from the world’s best athletes and coaches and unrivaled motivation and community-all designed to make running easier and a lot more fun.”

Nike reported fiscal 4Q16 revenues of $8.2 billion—a rise of 5.1% from $7.8 billion in fiscal 4Q15. Revenues of its footwear and apparel brands rose 6.3% and 3.9%, respectively. Revenues from equipment fell 5.8% between fiscal 4Q15 and fiscal 4Q16. Revenues from Western Europe, Greater China, and Japan rose 18.5%, 18.1%, and 21.7%, respectively. Revenues from Central and Eastern Europe and emerging markets fell 4.2% and 6.6%, respectively, between fiscal 4Q15 and fiscal 4Q16.

Nike’s net income fell to $846.0 million in fiscal 4Q16—compared to $865.0 million in fiscal 4Q15. It reported EPS (earnings per share) of $0.49 for fiscal 4Q15 and fiscal 4Q16. In fiscal 4Q16, the company repurchased a total of 9.0 million shares worth ~$540 million under the share repurchase program of $12 billion approved by the board of directors in November 2015.

In fiscal 2016, Nike reported revenue of $32.4 billion—a rise of 5.9% year-over-year. The company’s gross profit margin rose by 0.43% in fiscal 2016. Its net income and EPS rose to $3.8 billion and $2.2, respectively, in fiscal 2016—compared to $3.3 billion and $1.85, respectively, in fiscal 2015.

Nike’s cash and cash equivalents fell 18.5% and its inventories rose 11.6% in fiscal 2016. Its current ratio and debt-to-equity ratio rose to 2.8x and 0.75x, respectively, in fiscal 2016—compared to 2.5x and 0.70x in fiscal 2015. In fiscal 2016, the company repurchased a total of 55.4 million shares worth ~$3.2 billion at an average price of $58.44 under the old and new share repurchase programs of $8 billion and $12 billion, respectively.

As of May 31, 2016, Nike scheduled the delivery of $14.9 billion in orders from June to November 2016. This translates to a rise of 8% in orders from the previous year and a rise of 11% on a currency-neutral basis.

Nike declared a quarterly cash dividend of $0.16 per share on its Class A and Class B common stock. The dividend will be paid on October 3, 2016, to shareholders of record at the close of business on September 6, 2016.

In the next part, we’ll look at Foot Locker.