When Nike (NKE 0.50%) released its fiscal 2022 first-quarter financial results last month, management lowered revenue guidance for the current quarter and fiscal year primarily as a result of supply chain woes. "Factory closures have impacted production and delivery times," CFO Matt Friend explained. The stock tanked 9% over the next few days. 

These issues aren't specific to Nike, though, as many businesses are currently facing the same problems. But I ultimately think that all of this will prove to be a blip on the company's radar. Thanks to its powerful global brand and history of success, investors should never count Nike out. 

Track athlete with arms in air cheering a victory.

Image source: Getty Images.

Top of mind for consumers 

In the hyper-competitive apparel industry, the strength of a company's brand is everything. Fortunately for its shareholders, Nike is running circles around the competition in this category. 

According to Piper Sandler's latest "Taking Stock With Teens" survey, the Oregon-based enterprise was voted as the top footwear brand (57% of respondents) and top clothing brand (27% of respondents) by a wide margin. For a huge proportion of teens to view Nike in such a high regard should make other apparel businesses jealous. Because the average age of the group was just under 16 years old, Nike has a strong following from a key demographic that will be lifelong customers. 

Over the past decade, Nike's gross margin, a clear indication of its pricing power, has hovered in the mid-40s. This is a wonderful metric. What's even more remarkable is that the 46.5% gross margin registered in the most recent quarter was higher than Apple's, which is arguably the most powerful and successful brand in the history of business. 

Digital capabilities 

Supporting Nike's attraction for customers is its digital infrastructure, consisting of a suite of mobile apps like the flagship Nike shopping app and the SNKRS app geared toward sneakerheads. Here's Matt Friend again on the Q1 earnings call: "The Nike app continues to enable a convergence between physical and digital shopping journeys, eliminating friction for consumers." This app enhances shoppers' in-store experience with features like QR codes to pick up online purchases at designated lockers and discounts just for visiting a location. 

And the SNKRS app gives fans access to new product launches and events, which further increases engagement with customers. In the most recent quarter, demand in the SNKRS app grew more than 130%. The app is now available in 50 countries, demonstrating the deep connection Nike is building on a global scale. 

This technological push is all a part of management's Consumer Direct Acceleration initiative, a strategy aimed at providing a more seamless and interconnected customer experience. In today's competitive landscape, this helps separate Nike from the rest of the field. 

Trailing its younger rival 

Nike's 12% return so far in 2021 lags behind athleisure brand Lululemon's (LULU 2.10%) 16% gain. Unlike Nike, Lululemon actually raised guidance for sales and profit for its full fiscal year, citing strong momentum in men's, women's, and international categories. And while management mentioned supply chain problems, Lululemon's premium-priced products and 58.1% gross margin allow it to invest more in air freight and other excess capacity. The market clearly views these developments favorably. 

But Nike should never be counted out. It has a long history of success, steadily growing revenue and net income over time. And over the past 10 years, the stock price has soared almost sevenfold, crushing the S&P 500's performance. Today it trades at a lower forward price-to-earnings ratio (45) than Lululemon (54), giving investors a meaningful discount to purchase shares. 

Nike is a proven winner, thanks to its influential brand that's recognized all over the world. Excellence on the digital front will only strengthen consumers' connection with the business. This is still a great company to add to your portfolio.