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Basketball's Draw Continues to Boost Nike's Sales

Stocks in this article: NKE UA FL FINL HIBB

NEW YORK (TheStreet) -- Nike (NKE) and basketball. It sounds like an obvious combination considering how long Nike has been selling sneakers branded with the legendary Chicago Bulls basketball player, Michael Jordan. But in fact, basketball footwear is one of the growth drivers rocketing Nike forward.

"Basketball clearly is continuing to become much more of a global sport," Nike's President Trevor Edwards said during the company's third-quarter earnings call in March. "I think the fact that more people have a chance to see this sport all around the world, obviously, they watch the NBA with the great players that we have from Kobe, LeBron, KD, I think people have the chance to really experience how those players are just keeping the excitement in the marketplace."

"In terms of in the future, we continue to feel that the consumers are becoming increasingly excited about the sport, and we look at basketball as just a tremendous growth opportunity," he said. "And all the work that we're doing with Foot Locker (FL) at the House of Hoops, the work that we're doing in our DTC [direct-to-consumer] stores, are really helping to solidify the marketplace."

For the Beaverton, Ore.-based sports apparel and footwear retailer, sales from basketball jumped 21% in fiscal 2013 to $2.63 billion. Yet it represented a small portion of across-the-board Nike revenue, which includes footwear, apparel, equipment and other businesses, of roughly $25 billion in 2013, according to its annual filing with the Securities and Exchange Commission. (Nike's fiscal year ends in May.) That compares to sales from running, which brought in $4.27 billion last year, up 16% from 2012.

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Nike reports fourth-quarter and fiscal 2014 earnings on Thursday after the markets close. Analysts are expecting Nike to post earnings of 75 cents a share for its fiscal fourth quarter, down 1% from the year-earlier quarter, although revenue is expected to rise 10% to $7.34 billion, according to Thomson Reuters.

"Both the NIKE and Jordan brands continue to deliver the very best in basketball, with innovative products and groundbreaking experiences. Q3 was the 10th consecutive quarter of double-digit growth for our basketball category. And as the game becomes increasingly global, this growth story is just getting started," Edwards said.

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