Nike earnings surge, but investors unimpressed

FAN Editor

Nike knocked out double-digit earnings growth in its first fiscal quarter, with the increase due to factors that don’t include the retailer’s controversial advertising campaign featuring former NFL quarterback Colin Kaepernick.

The ad came out not long after the quarter ended, so any performance increases are likely due more to the FIFA World Cup of soccer that put the spotlight on players and teams in Nike clothing and shoes. 

Nike reported revenue of $9.95 billion on adjusted earnings per share of 67 cents, versus expectations of $9.94 billion in revenue on 63 cents per share. Still, shares fell nearly 3 percent in after-hours trading following the earnings release, trading around $82.50. They rose 0.6 percent to close regular trading on Tuesday at $84.79. 

Nike’s stock has had a sizzling year so far, rising 36 percent.

Nike stirred controversy earlier this month over its ad featuring former NFL quarterback Kaepernick, who in 2016 started kneeling during the national anthem to protest racial injustice. But after an initial hit to its shares, if anything the campaign has only seemed to strengthen the brand with its core demographic and investors, who have bid the stock higher since then.

While it’ll be months before the full business impact of Nike’s controversial deal with Kaepernick is known, it would seem that while drawing ire from conservatives, the latest addition of Nike’s “Just Do It” campaign had the company displaying its knowledge of a customer base that skews younger.

It’s not the first time Nike has stepped into cultural issues. The company came out with an “Equality” campaign showcasing Serena Williams and LeBron James in the wake of President Donald Trump entering the White House. 

“I don’t think it was a big gamble. Historically, Nike has always done this, so it was no shock,” said Antonio S. Williams, who teaches sports marketing at Indiana University. “They’re the king of emotional marketing, so everything they do, they do it with emotion.”

Nike did potentially endanger its status as one of two primary suppliers to NFL teams and fans, given Kaepernick is suing the league, alleging collusion on its part in stopping him from signing with a team.

© 2018 CBS Interactive Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.

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