I recently wrote an article about the effects of El Niño on Columbia Sportswear (NASDAQ:COLM). If you've never heard of El Niño before, head over to that article to see an overview about it. El Niño is a strong catalyst for stocks like Nike (NYSE:NKE); the ones that have deep penetration into the "athleisure" category -- you know, the comfy yoga pants and long-sleeve shirts that everyone seems to be wearing nowadays. My thesis of the article was that an unexpected hiccup in the inventory supply chain can cause lasting effects. The Columbia's Q3 blowout was founded on its ability to execute and distribute in a timely fashion (no pun intended), but with athleisure products on the shelves for longer as retailers suck every moment out of this warm stretch, Columbia gets the short end of the stick. Companies like Nike are picking up extra, unexpected revenue during these unexpectedly warm months. While it is hard to measure exactly how much, it is safe to say that it does not hurt the company's upcoming quarter.
(Source: Statista.com)
Above is a graphic showing Nike's revenue by segment. It is clear that footwear is far-and-away the largest source of the company's revenue. And we already knew this. Footwear can be an incredibly sticky product that attracts current wearers to the next iteration of the product. A simple example of this is Nike's Jordan brand. Most Jordan brand shoes are sold to millenials anxiously waiting for Nike's tweet containing the link to the page on which the shoes can be purchased. These shoes have an immense following. Most pairs of Jordans come in limited quantities and sell out within 30 seconds. No, you did not read that wrong. The hype surrounding these shoes is created by the shoes themselves (being available in limited quantities), and also through surprise releases. On occasion, Nike will tweet a link to a page selling a coveted pair of shoes without any notice. Things like these keep the brand recognition strong, fresh, exciting, and a sort of status symbol. Read the rest of the article, for free, on Seeking Alpha. |