World’s leading sport sneakers and apparels provider reported a 31% increase in its share price value for the year, ending at $125.78. However with it’s already established German counterpart Adidas and newcomers such as Under Armour Inc. and Skechers USA inc. Nike’s management is preparing bold strategies to increase desirability of their company.
Nike has introduced two for one stock split and plans to buy back additional $12 billion in shares. Market Watch reported that while splits don't change a company's value, they tend to generate renewed interest in the stock as the lower price makes it more attractive to a larger group of investors, driving up the value. The shares gained 3.5% after hours. The dividend increase to 32 cents a share on a pre-split basis marks the 14th consecutive year Nike has raised its payout. The yield increases to 1%.
Meanwhile, Lauren Pollock reported at Wall Street Journal, while the split applies to Nike’s Class A and Class B shares, the stock buyback is good over four years and applies only to the B shares. It comes as Nike expects to complete its current $8 billion plan by the end of May.
Nike has been benefiting from cultural trends that favor its products, but with a fast rising Under Armour Inc. and rapidly growing Skechers USA Inc. it needs to gear up for competition in near future.
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