On September 24, sporting giant Nike (NYSE:NKE) will be report its fiscal Q1 2016 earnings after the bell. Wall Street Analysts are expecting an EPS of $1.18 and revenue of $8.216 billion. On the contrary, the Estimize consensus is predicting higher EPS of $1.21 and revenue of $8.283 billion. The belief is that Nike will see a YoY increase in both EPS and revenue of 11% and 4%, respectively.
Investors and analysts are waiting to hear how the collapse of China’s equity markets may have affected Nike in the third quarter. Although Nike has been blowing up in China for quite some time (China makes up 10% of total revenue), Nike’s fiscal year concluded right before the meltdown of Chinese markets. And despite worries surrounding the Chinese economy, Nike may still continue its success due to policies supporting sports growth as an industry. The Chinese government is planning to attempt to grow the sports industry to over $700 billion within the next 10 years, with an emphasis on youth fitness and development programs and more allocated land for recreational and competitive use. This new strategy would allow Nike to assert marketing campaigns, use athlete promotions, and establish itself as the athletic brand of choice.
Even though Nike is reputable in China and around the world, it must find new and innovative ways to stay ahead of gaining competitors. With the recent surge of Under Armour (NYSE:UA) and Sketchers, is Nike still considered the industry standard for sports apparel and footwear? The Oregon based powerhouse does indeed remain the industry leader, boasting its $30.6 Billion worth of sales last fiscal year. However, Under Armour has pledged that revenues will be doubled within the next few years to $7.5 Billion and Sketchers has overtaken the No. 2 spot in terms of sports footwear producers in the US.
Last year, Nike shed its fuelband line in order to focus on fitness based applications. As of now, Nike and long-time partner Apple (NASDAQ:AAPL), are working on new software and developments to be released in the future according to CEO Mark Parker. Wearable tech has been and is increasingly becoming a hot space in which sports and technology are blended, and several companies, such as Fitbit (NYSE:FIT) and Under Armour are making noise the marketplace. Everyone is trying to get to the top and it appears to be a great race thus far.
With heightened competition, the Phil Knight led company faces the challenge of continuously beating out its opponents. For now, the firm is OK. But expect a heated battle as Nike fights to remain in the top spot for athletic apparel in the US.