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Adidas’ Impressive 3rd Quarter, Brooks Running Experiences Double-Digit Revenue Growth
Adidas (ADDYY) reported Q3 ’17 sales those rose 9% YOY (to $6.6 billion) and profit that increased 30% YOY (to $610 million), driven by growth in China (+28%) and the North America (+31%). The company experienced double-digit growth within its running and outdoor categories and with its Adidas Originals and Neo fashion lines. CEO Kasper Rorsted reiterated full year sales (+ 17%-19%) and income (+26%-28%) forecasts, which the company raised back in July, and said he is “quite optimistic” 4th quarter growth would outperform previous years.
Howie Long-Short: Performance footwear may not be “in style”, but there seems to be some momentum with sales of running shoes. Adidas’ running category experienced double-digit growth during the 3rd quarter and Brooks Running, which creates sneakers for avid runners, grew its revenue 14% during the same time. The Berkshire Hathaway subsidiary now generates 30% of its revenue from e-commerce sales, has expanded in to China and Brazil (after showing success in Europe, Japan and Canada) and is working to grow brand awareness within a younger demographic (25-35). I like what BRK.A is doing with this niche footwear brand.
Fan Marino: ADDYY has released a highly personalized new app that includes a custom news feed, chatbot (to answer questions) and full online store; with Joseph Godsey, global head of digital commerce saying the personalized experience is “meaningful enough” to bring consumers back. Perhaps it is, e-commerce sales grew 39% during the quarter. It had better be if the company is to hit its goal of $4 billion euros in e-commerce sales by 2020; the company only reached $1 billion in online sales in 2016.
Note: The summary for this story was co-written by our friends at The Water Coolest. Check out TheWaterCoolest.com for the latest market news and professional advice.
Amazon Pleased with TNF Audience, Undecided on Future Pursuit of Exclusive Sports Broadcasting Rights
Last night’s Cardinals-Seahawks game marked the halfway point in Amazon’s (AMZN) season long experiment streaming Thursday Night Football, and according to Jim Lorenzo, head of sports, Amazon Video, the company is pleased with viewership numbers (8.6 million through 5 games), engagement (51 minutes) and the reliability/quality of their cloud-based streaming service. Through the first 4 games, AMZN self-reported viewership figures that surpassed what Twitter (TWTR) drew last season; particularly noteworthy as Amazon requires Prime members to log-in, while TWTR’s stream was free (TWTR also has 330 million users compared to 65-80 million Prime members). Amazon will stream this week’s inaugural Next Gen ATP Finals, but beyond that, Lorenzo says that it is too early to say if the company will pursue future exclusive sports broadcasting rights.
Howie Long-Short: In an interview with Andrew Ross Sorkin at the NYTimes Dealbook conference, Mark Cuban spoke of the “large entertainment media platforms” (i.e. Facebook, Google) and their inability to be “truly effective in recreating audiences”. Cuban says that media consolidation to this point has been “irreverent” and predicts that broadcast rights will continue to skyrocket. You won’t find an argument here. While leagues want to play in the digital space, digital-only broadcast deals aren’t coming anytime soon. NFL Senior VP, Digital Media, Vishal Shah recently confirmed that point saying, “we continue to think some of the best days are ahead [for traditional TV partners] despite some shifts in the media landscape.”
Fan Marino: While Amazon is pleased with their viewership numbers, ESPN (DIS) is less than pleased with the 15% audience decline (to 1.138 million) “NFL Countdown” has seen this fall. You can place the blame on Sam Ponder, who replaced Chris Berman after 31 years as the show’s host, but the audience decline began last season (-10% YOY) after Tom Jackson’s 2015 retirement. The appeal to Countdown was the chemistry between Boomer and TJ. Now, it’s just another pregame show.
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Nike Paying $1 Billion to be the NBA’s Official Uniform Supplier, Stars Covering Up Swoosh
Nike became the official supplier of NBA uniforms this season, having agreed to pay $1 billion over the next 8 years for the right to place their company logo on team jerseys, shorts and socks; but the partnership has gotten off to a rocky start. The new jerseys have been tearing and stars Steph Curry and James Harden, who represent competing sneaker companies, have gone out their way to avoid having the Nike logo visible near their shoes; rolling or cutting down their socks to protect their lucrative endorsement contracts. Unfortunately for Nike, nothing in the NBA’s operations manual prohibits a player from wearing team issued socks as they please.
Howie Long-Short: While Nike (NKE) can’t be pleased, they signed this deal to put their swoosh on jerseys; not socks. Adidas was the league’s previous official uniform supplier and their contract didn’t even include socks (Stance was the league’s supplier during the ’16 season). ADDYY held their earning call on Thursday and while the news was overwhelmingly positive, the company did note that the loss of the NBA jersey contract has hurt basketball revenue sales. In this case, their loss is NKE’s gain.
Fan Marino: Want to get a good look at Curry’s (or Harden’s) newest player exclusive? Strap on your Samsung GearVR or Google Daydream headset and pull up a courtside seat to the game. Intel (INTC) has announced a partnership with Turner Sports (TWX) that will enable the company to broadcast select NBA on TNT games using TrueVR technology; beginning with the 2018 All-Star game. Users will be able to choose their camera angle (including courtside) and freeze and watch highlights in 360 degrees.
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What is JohnWallStreet?
JohnWallStreet is not a person or location, but a destination for the educated sports fan.
While we won’t be publishing “hot takes” on LeBron’s relative greatness to Jordan, we will be offering up the most relevant sports related finance news, in easily digestible bites, with commentary from both the equities analyst and sports fanatic perspectives.
We’ll cover publicly traded professional teams & stadiums, television networks, apparel & footwear companies, equipment companies, ticketing companies, content and facilities providers. If it trades on Wall Street, and has a sports angle, it’s in our wheel house.
Howie Long-Short and Fan Marino will be providing their expert opinions on each story. They have slightly different areas of expertise. Fan Marino is a firm believer that the SEC is the premier football conference. Howie Long-Short knows it as the Security & Exchange Commission. Fan Marino lives and dies with the college selection of 5 star, blue chip recruits. Howie Long-Short spends his days analyzing blue chip stocks. Howie Long-Short knows that Black Monday occurred on October 19th, 1987. Fan Marino swears it happens every January after Week 17. You get the point.