Nike FY numbers - Growth all round

Last week, Nike had results that pushed their share price to record highs. The main reason for the stock price pop, was because North America returned to growth, after three-quarters of declines. North America is 40% of Nike's total sales, so it is a significant region. I do feel though, that US based analysts sometimes forget that there is a world beyond the Mexican wall Pacific Ocean. We saw it with Netflix, the share price would move purely on US subscriber numbers, even though international subscribers were multiplying. The Netflix share price only took off after it become clear that the international market was going to eclipse the US market.



Apart from the fact that Nike will net millions in sales from football jersey's because England/ Brazil are going to win the Football World Cup, you want to own Nike for their massive growth in China. Over the last year, they grew revenues by 35% in China! This trend is not expected to slow down, in time the expectation is for China to be more significant to the group than North America.

In late 2015, Nike hit troubled waters due to some of their main retail partners, like Dick's Sporting Goods, closing stores. The solution for Nike was to go directly to customers, partly through their own stores but mostly through online. This gives Nike control of the customer experience from start to finish, but more importantly, it improves their margins! They don't have to share their profits with a 3rd party retailer. About a third of their revenue comes through Nike Direct now, with their digital/online offering growing by 25% over the last year.

Having a look at Nike's balance sheet, they have $5.2 billion worth of inventory on hand. Sometimes we just see numbers and don't translate it into their real-world size; $5.2 billion dollars worth of inventory is bigger than the market caps of Woolworths and Famous Brands combined!

Buy Nike shares, then buy their product and then get active!