Dividends and Nike shares slip after Duke’s star’s sneaker rips

In college basketball the number one rated team is the University of Duke Blue Devils and the expected number one draft choice for the NBA is playing for Duke, his name is Zion Williamson When you have those overlaying circles, the suppliers of shoes and uniforms will be under the spotlight, in this case it is Nike. In late February Duke was playing North Carolina, the game was matching the hype until something unusual happened. Zion was wearing Nike shoes, these shoes are not the ones you can buy at the sports store, but specially made for the Duke players. Zion’s shoes split, something that would happen if you bought very cheap shoes after a few weeks of wear. As expected social media picked up the accident because that should not happen to premium shoes.

On the stock market, shares of the company fell 1% or $1.46 billion in market capitalization (price of stock times number of shares outstanding). Mr. Williamson was wearing the Nike PG 2.5 basketball shoes which sell for around $100 on Nike’s website.

Nike is showing signs of a rebound as it speeds up new product launches and expands partnerships with online retailers. In an article by Melissa Fares and Amy Tennery of Reuters, Nike has forecast sales growth for 2019 approaching low double digits. Analysts were not expecting the incident to have long lasting effects on the company. Company spokes people said the quality and performance of our products are of utmost importance. We are working to identify the issue.

Linking to dividend paying stocks, sticking to basics never changes. Doing it well is a daily challenge and all companies have to focus on getting the basics right. How well the company does it and understands how to correct mistakes, is something you can easily determine. If the company does it well, then you can expect they fix the worst errors.

There are more questions than answers, till the next time – to raising questions.

 

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