10 Footwear Apparel Stocks Affected By China Tariffs

5. NIKE Inc. (NYSE:NKE)

NIKE Inc. is a leading developer, designer, marketer, and supplier of athletic equipment, footwear, accessories, apparel, and services. The company supplies its products to athletic specialty stores, department stores, sporting goods stores, footwear stores, and other retail accounts. The company sources 18% of its products from China.

NKE’s Q2 performance indicates that the company is undergoing a tough period. Revenue declined by 8% YoY in the Chinese market. However, this was lower than the analyst expectations of a 10% decline. Gross margins also slightly decreased to 43.6% as compared to the previous year’s same quarter at 44.6%. Despite the above challenges, here are the positives about the company: a 5% decline in operating expenses that can provide the company with a much-needed cushion to expand its marketing budget.

On top of that, the company prioritizes shareholders’ returns as the dividend was increased by 7%, with $1.1 billion spent on share buybacks. Analysts believe that the decline in Chinese market sales is recoverable. The company has constantly earned a high return of over 20% on its investments and that’s mainly because it knows how to deal with changing consumer preferences. Even though NIKE’s stock price dropped notably, with innovative products and solid brand power, it represents a rewarding long-term investment opportunity.