Tuesday, 23 December 2014
Nike, the largest provider of sporting gear in the world has slid the most in the last couple of quarters after orders has failed to measure up to analysts' forecasts, mainly because of the slow demand from emerging markets.
A primary factor which contributed in the fairly high expectations is the good performance of Nike shares in the previous year. According to Cheyney Group Marketing's statement, orders for Nike gear have previously been on an upward trend, hence the 11% gain that was predicted by analysts. As they say, when you're already in such a high place, it's not enough to just rest on your laurels -- you have to plan how to surpass your own records.
In Nike's biggest market alone, orders increased by 13%, but still slightly under the 13.1% forecast while in Europe, they also rose by 13% but significantly lower than the 15% estimate. Moreover, orders coming from other markets only rose by 1% compared to the 7% estimate.
Not only did the NKE shares slide as much as four percent but also those of retailers that offer its products such as Finish Line and Foot Locker.
Meanwhile, net income on the last quarter increased by 23% or 70 cents per stock which just about fulfilled the prediction of Cheyney Group Marketing analysts. On the good side though, its revenue has increased by a whopping 15% while beating forecasts of analysts.
Such orders were observed closely for most investors see them as a foreshadowing of how the brand will sell in the future.
Though NKE shares did drop because of last week's unfavorable results, they increased fairly well on the first quarter of 2014 as the brand's athletic wear finds its way into mainstream fashion and casual outfits through the "athleisure" trend.
Meanwhile, Nike's close rival, Adidas, has consistently exceeded expectations of analysts by posting favorable profit and sales numbers -- perhaps owing to the fact that it has reduced its profit estimate due to weak demand in sports gear.