By sponsoring Brazilian front-man Neymar, and Portugal’s Cristiano Ronaldo in addition to a number of other great players, Nike Inc (NYSE:NKE) has opened up its coffers to flood this World Cup with its products and that investment is paying off in spades.
Opening the wallet
Nike Inc (NYSE:NKE) spent 12% of its total revenues on “demand creation” and spent 36% more than it did for the quarter ending May 31st year-over-year.
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For the same quarter, revenue is up 11% on strong cleat and apparel sales while Nike increased its profit margin by raising prices. Presently, Nike has a better chance of being the outfitter of the winning side next month according to Las Vegas betting odds.
Nike Inc (NYSE:NKE) is clothing and shoeing the Brazilian squad along with the surprising emergence of Holland, while adidas AG (ETR:ADS) (OTCMKTS:ADDYY) has both the German and Argentine teams in contention among the favorites. France’s resurgence is another team that Nike equips while Adidas has Columbia.
The company is happy to point out that it is has set “a new benchmark” with its advertising blitz in Brazil. “Having just returned from Rio, I have to say I have never seen energy like that before,” Trevor Edwards, president of the Nike brand, said on a conference call with analysts. “The enthusiasm we see in Brazil, coupled with our No. 1 footwear market share around the world, is living proof that our football business has never been stronger.”
Yesterday, Nike Inc (NYSE:NKE) beat analysts expectations when they reported earnings of $0.78 per share up from $0.76 in the corresponding quarter. Revenues from continuing operations came in at $7.43 billion up 13% year-over-year. The Street’s consensus expected earnings per share of $0.75 and revenue of $7.34 billion according to those surveyed by Thomson Reuters.
Adidas has long ruled Nike when it came to soccer sales but the world’s largest sportswear manufacturer is catching up quick with its stable of the world’s best players wearing its gear.
Following Nike’s earnings the company picked up quite a bit in after hours trading but dipped within minutes of the opening bell. It’s stayed fairly steady throughout today’s trading and is presently at $78.01 up $1.15 from yesterday’s close for a gain of 1.54%.