December 22nd, 2020 | 08:37 CET
Nike, RYU Apparel, Adidas - Which share is now setting off at a sprint?
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The native Rhineland-Palatinate has been a passionate market participant for more than 25 years. After studying business administration in Mannheim, he worked as a journalist, in equity sales and many years in equity research.
Nike - new all-time high marked
The undisputed number 1 in the industry, Nike, presented good quarterly figures as of the end of November last Friday, exceeding market expectations. The stock marked a new all-time high in the area of USD 141.
Nike increased group sales by 9% to USD 11.2 billion, with substantial growth of 24% in the China region. Gross margin slipped slightly to 43.1%, but this was due to higher marketing expenses and charges from Covid-19. The online business was remarkable, with a year-on-year growth rate of 84%. "Driven by compelling, innovative products and global brand momentum, we continue to build on our leadership position. Our strategy is working, and we look forward to what lies ahead," said CEO John Donahoe, summing up the successful quarter.
It is not surprising that several analysts have upgraded the share given the good figures and outlook. On average, the experts see a fair price level of USD 160 and thus a potential of around 14%. Nike is, and remains, a core investment in the industry.
RYU Apparel - innovative and enterprising
RYU Apparel is an emerging urban sportswear brand. The Canadians have launched "Urban Athletics," a new category: tailored innovations for the urban athlete. The product range includes apparel, bags and accessories. RYU manufactures in North America and Asia, with distribution mainly online.
RYU is attracting attention with innovative and novel branding and marketing partnerships. Yesterday, the Company announced that its existing supply of high-performance apparel to Canada Skateboard now includes exclusive sports bags and backpacks. Canada's bags and backpacks have won multiple awards for design and functionality. Bags are the biggest revenue generator thanks to innovation and aesthetics.
Recently, RYU started to promote branding by placing apparel in its new series "The Count". Indeed, research shows that when used correctly, such placements have a more significant impact on brand awareness, brand recall and purchase intent than "regular" TV advertising. We are confident that this enterprising Company will have many more success stories and healthy growth. With a market capitalization of around CAD 21 million, there is still plenty of room for improvement.
Adidas - new year, new strategy, new high?
The number 2 in the sector, Adidas, showed a price recovery to almost EUR 300 in December. In the wake of the good Nike figures and due to the weak Dax on Monday, the shares fell slightly.
Sentiment for the sports and lifestyle sector remains good. The strong recovery after previous burdens from Corona as well as the high growth momentum of online retailing inspires investors. Also, rumors that Adidas could divest itself of the Reebok brand have recently increased again. Reebok only accounts for a small share of Group sales and has had to be restructured in the past. The Dax member had announced a few months ago that it was looking at several options for the future of Reebok.
Investors who invested in the title a year ago are now slightly in the red. But those who have been on board for longer have seen gains of more than 200 percent in the last 5 years. We are convinced that Adidas will surprise positively next year. In March 2021, the Group will unveil its new strategy. We have every confidence in the charismatic CEO Kasper Rorsted, who has led the Company to new records since autumn 2016. A new all-time high in 2021 would then come as no surprise.
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