Nike: Shoes as a leading economic indicator
Nike (NKE) reported earnings yesterday. They were mediocre. Revenue decreased two percent to $4.4 billion for the last quarter. Net income was $243.8 million or 50 cents, compared to $463.8 million or 92 cents in the period a year ago. The numbers were old news. They were within the bell shaped curve of what analysts expected.
What did come as something of a surprise was that worldwide future orders for Nike brand athletic footwear and apparel, scheduled for delivery during the current quarter, totaled $6.5 billion, 10 percent lower than orders reported for the same period last year.
The Nike numbers are a fairly good indication that consumers are pulling back from buying even inexpensive products. A pair of athletic shoes costs an average of something like $50. The fact that sales for something that affordable are off so much says a great deal about how poor the consumer is, or at least how poor he feels that he is.
The markets have been up recently on optimism that the economy has bottomed. But there is a lot of anecdotal evidence that this is not true. People are not buying more clothing at retail outlets. Car sales are still dead. Video game console sales have gone to hell.
And now people don't want to buy new shoes.
Douglas A. McIntyre is an editor at 24/7 Wall St.