Today, we are adding Nike Inc. (NYSE:NKE) to our growth portfolio. Nike Inc. has a track record of long-term growth and innovation especially in the footwear category which will fuel growth into the next decade. With the announcement yesterday that the company will layoff 2% of its global workforce, paired with growth concerns, and no help from the Warriors going 4-1 against the Cavaliers in the NBA finals, many investors are becoming fearful. Our take is that people will not suddenly start collecting Under Armour (NYSE:UA) shoes (or Adidas for that matter) and this short term price weakness is a great opportunity for long-term oriented investors. Sneaker collectors have catered towards a common theme; most if not all types of sneakers collected have been Nike branded (ex: Air Jordans, Air Force Ones, Nike Dunks, Nike Skateboarding, Nike Foamposites, Nike Air Max, and recently the Nike Air Yeezy).
image source: Direct Industry
Nike has consistently innovated and provided customers a high performing sneaker which is also aesthetically pleasing.
In fact, every Nike brand geography grew revenues for Fiscal 2016. Footwear sales grew 29% in China and 9% in North America. In the last 10 years, total revenue has grown an average of 8%, which has translated into 10% average operating income growth and 12% EPS growth.