Thursday, April 10, 2014

Nike Bets Billions On Soccer As The World Cup Nears

This article was originally published by GuruFocus on March 31, 2014

By Sarfaraz A. Khan. Research assistant: Gohar Yousuf
The world’s biggest athletic merchandise manufacturer, Nike (NKE), has recently released its quarterly results that were better than market’s expectations. The company has significantly increased its advertising expenditure, which it calls demand creation, as it gears up for the upcoming FIFA world cup in Brazil which is only three months away. The company has also, reportedly, forged a massive $1 billion deal with Manchester United (MANU).

For the world cup, Nike has got more kit-sponsorship deals than any of its rivals. Nike’s shares have risen by 14.5% in the last 12 months and closed at $73.54 on Friday. According to analysts’ estimates compiled by Thomson Reuters, Nike’s revenues and earnings could grow by 10% in the current fiscal year which ends in May, 2014 to $27.1 billion and $2.97 per share.

Since the current fiscal year ends just a month before the FIFA world cup, therefore the positive impact of the company’s world cup related efforts will not become evident until the end of the next fiscal year. .. read full article at GuruFocus