Nike Puts Another Quarter in the Back of the Net

This most recent quarter may have been bad news for some retailers, but Nike was able to keep the pedal firmly to the floor.

Jun 29, 2014 at 11:02AM

It's finally been cracked. The key to running a successful business is so simple that it's shocking we didn't discover it earlier. It turns out all you need to do is sell a product that supports the most popular sport in the entire world. Nike (NYSE:NKE) made the breakthrough earlier this year when, in gearing up for the World Cup, the 250 million soccer players and billions of soccer fans worldwide bought all kinds of stuff. The World Cup turned normal humans into soccer-loving savages and they quickly gave Nike $7.4 billion over the quarter.

In fairness, not all of that was soccer's doing. Nike had a solid quarter across many of its businesses, but soccer was a standout. Revenue from the division, which was close to $2 billion in the quarter last year, grew 18% to $2.3 billion. The World Cup made Nike a fortune, but only because Nike had the good sense to take advantage.

Nike's goal differential
Nike is making the most of the World Cup with more players wearing Nike shoes than all other brands combined, according to the company. The momentum of the tournament is going to help Nike as it pushes into the next fiscal year, and it's expecting revenue to grow by low double digits.

Look back at that first point -- more shoes than all other brands combined. The "other brands" in that statement are basically just Adidas and Puma -- founded by feuding brothers Adolf and Rudolf Dassler in postwar Germany. Under Armour (NYSE:UA), which is often synonymous with football in the U.S., isn't even on the shoe radar.

According to a report from Businessweek earlier this month, Under Armour has shod two -- as in one plus another -- players in the World Cup, one of whom has been eliminated. The company is trying to make inroads, and it needs to if it wants to compete on the world stage, but it's slow going. Right now, Nike is simply dominating the game, with Under Armour watching from the bench.

Not all soccer at Nike
Nike also had success in its basketball division, which grew revenue by 19% over the quarter last year. Actually, the only decline came in Nike's second smallest division, golf. Everything else grew at a solid clip, helped along by higher average sale prices. That pushed gross margin up 1.7 percentage points for the quarter and up 1.2 points for the fiscal year. 

The company's solid sales growth and gross margin improvement, not to mention its consistent dividend, make it an excellent business on just about all accounts. With growth still in the double digits and a world of opportunity in areas like golf, women's wear, and emerging markets, Nike looks like it's going to continue being The Name in sports for a long time. It's easy to imagine World Cup 2016 being a repeat of 2014, for Nike and its investors.

Score one for the good guys
Imagine the multibillion-dollar sales potential behind a product that can revolutionize the way the world shops and interacts with its favorite brands every day. Now picture one small, under-the-radar company at the epicenter of this revolution that makes this all possible. And its stock price has nearly an unlimited runway ahead for early, in-the-know investors. To be one of them and hop aboard this stock before it takes off, just click here.

Andrew Marder has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Nike and Under Armour. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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