Shoe Makers Might Get Kicked by the NBA
Basketball shoe makers such as Adidas, Nike (NYSE:NKE), Under Armor (NYSE:UA) and Foot Locker (NYSE:FL) have the potential to lose $500 million in sales if the this year’s NBA season is canceled. That loss amounts to approximately 25% of the $2 billion basketball sneaker market, according to Marshal Cohen, chief industry analyst at the worldwide market research company NPD Group.
The lockout situation is tricky for the league’s national sponsors including Anheuser-Busch (NYSE:BUD) and Coca-Cola (NYSE:KO). The company hit hardest might be Adidas which is about halfway through an 11-year deal as official outfitter of the NBA. Adidas could lose up to half of its $250 million to $300 million in sales generated annually from licensed NBA merchandise. However, despite the lockout, Adidas is currently seeing strong sales from endorser Derrick Rose’s new signature shoe, the adizero Rose 2. Adidas’ basketball business grew 25% in the company’s last fiscal quarter.
Nike spokesman Brian Strong commented on the lockout by saying, “in the interim, we also know that basketball never stops. Through our campaign, we are celebrating the never-ending spirit of the game and the players who love it.”
Even if the NBA loses the season, “Kids are still playing basketball in high school and college,” No. 1 draft pick of the Charlotte Bobcats Kemba Walker says. “Their still going to buy the shoes. As long as they want them, they’ll get them.”
Here’s how these shoe stocks are trading today:
- Nike Inc. (NYSE:NKE): The shares recently traded at $97.17, up $0.42, or 0.43%. Its market capitalization is $45.05 billion. They have traded in a 52-week range of $66.34 to $97.68. Volume today was 1,731,207 shares versus a 3-month average volume of 3,346,970 shares. The company’s trailing P/E is 21.10, while trailing earnings are $4.61 per share. The company pays a dividend of $1.24 per share for a dividend yield of 1.30%. About the company: NIKE, Inc. designs, develops, and markets athletic footwear, apparel, equipment, and accessory products for men, women, and children. The Company sells its products worldwide to retail stores, through its own stores, subsidiaries, and distributors.
- Under Armour, Inc. (NYSE:UA): The shares recently traded at $85.72, down $0.11, or 0.13%. Its market capitalization is $4.42 billion. They have traded in a 52-week range of $45.85 to $87.40. Volume today was 776,307 shares versus a 3-month average volume of 1,513,780 shares. The company’s trailing P/E is 51.02, while trailing earnings are $1.68 per share. About the company: Under Armour, Inc. develops, markets, and distributes branded performance products for men, women, and youth. The Company designs and sells a broad offering of apparel and accessories made of synthetic microfibers.
- Foot Locker, Inc. (NYSE:FL): The shares recently traded at $22.08, down $0.44, or 1.95%. Its market capitalization is $3.38 billion. They have traded in a 52-week range of $15.63 to $25.50. Volume today was 1,252,548 shares versus a 3-month average volume of 2,922,920 shares. The company’s trailing P/E is 14.43, while trailing earnings are $1.53 per share. The company pays a dividend of $0.66 per share for a dividend yield of 2.90%. About the company: Foot Locker, Inc. is primarily a mall-based athletic retailer that operates athletic retail stores in countries located in North America, Europe, and Australia. The Company provides athletic footwear and apparel through its Foot Locker, Lady Foot Locker, Kids Foot Locker, and Champs Sports retail stores. Foot Locker also operates a direct-to-consumer channel, Footlocker.com/Eastbay.