Global athletic and apparel maker Adidas released better-than-expected quarterly earnings. So did rival Nike Inc. (NYSE: NKE) about a month ago. Given the hundreds of millions of athletic shoes sold by them each year, in addition to the clothing each sells and the number of markets in which they operate, their results may not be a bad proxy for the global consumer economy.
According to the Adidas first-quarter earnings release:
In the first quarter of 2013, Group revenues were stable on a currency-neutral basis as a result of sales increases in Retail and Other Businesses. Currency translation effects had a negative impact on sales in euro terms. Group revenues decreased 2% to € 3.751 billion in the first quarter of 2013 from € 3.824 billion in 2012.
And:
Retail sales increased 6% versus the prior year, driven by sales growth at both adidas and Reebok.
As should have been expected, sales in the Adidas home market of Europe dropped 6%. That was offset by a 2% improvement in North America and a 6% increase in China. Adidas sales look very much like the global economy.
It’s rival did even better. Nike revenue grew 9% to $6.2 billion. However, the mix by geography was different, probably more for competitive market share reasons than the health of economies from region to region. In its home market of North America, sales rose 18%, powered by footwear. Western Europe revenue rose an unexpected 8%, which is impressive for a region that is in recession. And China sales tumbled 9%, which is odd, given the relative economic health of that region.
Despite the global mix of sales, each company did well and was rewarded by an increase in stock price.
A pair of athletic shoes costs what? Perhaps as little as $20 in China and as much as $100 in the United States and European Union. Regardless of the region, these purchases are discretionary. Other shoe companies make products that cost less, and these likely are bought by people who cannot afford more expensive products or think they are a frivolous expense. But, around the world, with great regularity, people will make these modest purchases of Nike and Adidas shoes. It may not be much, but it is a signal that consumer spending has not died altogether.
Want to Retire Early? Start Here (Sponsor)
Want retirement to come a few years earlier than you’d planned? Or are you ready to retire now, but want an extra set of eyes on your finances?
Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help you build your plan to retire early. And the best part? The first conversation with them is free.
Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.