The England National Women’s team are embarking on their World Cup adventure and their kit is sponsored by a very well-known sports brand – Nike.
The ladies are not alone. Any sports fanatic’s wardrobe is bound to have something emblazoned with that infamous tick – trainers, hoodies, jogging bottoms, sweat-bands or a t-shirt.
Nike and the Football Association struck a sponsorship deal back in the summer of 2012 and since then the company’s share price has risen an astronomical 215%.
The past 12 months saw the stock outperform the S&P500 index, returning 10.3% to June 6, 2019, compared to the index return of just 2.6%.
Beyond the sports brand, the group has ambitious digital plans in play and have recently launched an in-store app that has boosted its membership growth.
The company wants this increasing member base to create better customer engagement and loyalty to the brand, ultimately forging a stronger relationship between the brand and its consumers.
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It also has great expansion plans for the Chinese market, where growth in the demand for high-end footwear and sports brands is on the increase.
It is reaching out beyond the usual sports fan and gym bunny, too, becoming the first major sports brands to use plus-sized models to show off its garments. Nike was praised by many for its displays in its Oxford Street flagship stores that used mannequins way above the usual size 0.
These plans are exciting for investors that want to see this obsession with sportswear transferred into their portfolio, but of course, there are headwinds to be mindful of.
Trump’s trade conflict with China and the recent tariff announcements will no doubt have an impact on Nike’s expansion plans in China.
On the flipside, around 20% of Nike goods are manufactured in China and while the business is large enough to absorb some additional costs, it is likely that the US consumer will face increased prices as a result of the 25% tariff.
In spite of this, the multi-billion-dollar brand’s earnings per share is still expected to grow by almost 20% this year as it continues to develop both digitally, and in Asia.
In the first quarter of 2019, Nike’s share price has risen from $74.6 to $82.5. Maybe it is time to put your best running foot forward and invest in the brand behind your favourite trainers.
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