LeBron and the Cavs are in trouble, but Nike is a champ
It’s not looking good for LeBron James and the Cleveland Cavaliers against the Golden State Warriors in the NBA Finals. But LeBron’s sneaker company of choice, Nike, has been a slam dunk stock this year.
Nike’s stock is up nearly 20%, near an all-time high. It’s one of the top Dow performers in 2018 — and it was up about 25% last year too.
Nike(NKE) has enjoyed a nice rebound from a brutal 2016, when shares fell 20% and the company was the biggest loser in the Dow. That was mainly because of sluggish sales and growing competition in the United States from German rival Adidas.
But Nike’s recent strength may surprise some people.
It comes despite the fact that Nike president Trevor Edwards, who many viewed as a likely successor to CEO Mark Parker, stepped down in March following workplace misconduct allegations. Edwards was one of several execs to leave Nike.
It’s not as if Nike is profiting at the expense of its competitors.
Under Armour(UA), who sells sneakers endorsed by LeBron rival Steph Curry of the Warriors, has bounced back this year too, largely because of strength in international markets. Under Armour’s stock (UAA) is up more than 65% this year.
And Adidas (ADDDF) hasn’t lost any momentum either. Shares are up another 20% in 2018.
Related: Adidas says Kanye West ‘is a very important part’ of its strategy
So what’s going on? It appears that consumers are buying more athletic apparel in general this year. A rising economic tide is lifting all boats, or in this case, sneakers and sweatpants.
Lululemon(LULU) is also trading at an all-time high. And sporting good retailers Dick’s (DKS) and Foot Locker (FL) recently surprised Wall Street by reporting strong sales too.
The sneaker slump may be over. Nike CEO Parker said in its last earnings report in March that there was a “significant reversal” in the trend of weak North America sales. He noted the company was starting to gain momentum in its home market.
Parker said sales of basketball shoes were particularly strong across the globe. That was in part because of new sneakers in the LeBron line as well as the launch of the latest shoes for former LeBron teammate Kyrie Irving (now on the Boston Celtics) and Paul George of the Oklahoma City Thunder.
Parker added that the company was doing extremely well in China, where sales rose 24% in the past quarter. China now makes up 15% of the company’s overall sales.
After Justin Timberlake wore Nike’s new limited edition Jordan 3s during the Super Bowl halftime show in February, the company immediately started selling them on its new SNKRS app, which is now available in China.
Even though Michael Jordan hasn’t played professional basketball since 2003, demand continues for his signature shoes. Apparently, a lot of people still want to be like Mike.
