The Nike and McDonald’s Economy

By Douglas A. McIntyre Published Sep 23, 6:23AM EDT

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Nike (NYSE: NKE) is one of the few companies that posted strong profits for the past quarter and offered optimistic guidance going forward. It joins McDonald’s (NYSE: MCD) as one of the world’s largest consumer-based companies that continues to be an unqualified success even as the economy deteriorates.

Nike revenue rose 18% in the past quarter to $6.1 billion. Earnings were up 19% to $1.36 per share. Most important, worldwide future orders were up 16%. “As of the end of the quarter, worldwide futures orders for NIKE Brand athletic footwear and apparel, scheduled for delivery from September 2011 through January 2012, totaled $8.5 billion,” the company announced. Nike is not slowing down.

Nike’s stock trades near $90, close to its 52-week high. It has remained near that high because people around the world are willing to pay $60 for a pair of athletic shoes. Nike’s image helps those sales. Its brand is one of the most valuable in the world, according to BrandZ. The research firm puts it at $13.9 billion, up 10% from last year. Nike has used its brands to successfully market its products as the best in the market. And, in a world in which the economy is troubled and may be getting worse, $60 is an amount that many people can afford.

Few other multinationals have done as well with the consumer as Nike has in the past quarter. The most notable is McDonald’s, which also sells a premier brand at an affordable price. McDonald’s shares have defied the market drop because its sales around the world have stayed strong. McDonald’s brand is valued at $81 billion, an increase of 23%. It has built that brand value on the back of $2 premium coffee and $5 meals.

Price will become an increasingly important consideration as the world economy enters what appears to be another recession. Affordable goods and services sometimes flourish in this kind of environment. The ability to do that is often based on a reputations that take decades to build. And champagne at a beer price.

Douglas A. McIntyre

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.