Battle of the brands

For decades Nike has been a dominant force in sportswear. The global sportswear market is worth over US$350 billion in sales with the US market representing just over one third of that. Nike’s investment in footwear technology and it’s brand marketing and sponsorships has enabled to lead it’s competitors in developed markets. It’s wide global appeal has seen it’s sales rise to over $45 billion and it’s market capitalization soar to $200 billion. European brands such as Adidas, Puma and Fila have focused on niches in footwear and sportwear apparel, while an emerging brand out of Switzerland has focused on investing in new footwear technology and counts Roger Federer as a shareholder. During Profeta’s analysis of the sportwear market we were surprised to see that Fila generates over three times the sales and earnings as On Holdings yet it’s market capitalization is only US$1.5 billion, compared to On at $8 billion and Nike at $200 billion. What is even more surprising is that while Fila has a strong global brand developed out of Italy, that we all know, it also controls golf’s dominant brand, Titleist. It’s stake in the Titleist brand is worth over US$1.5 billion, which means that you are getting the Fila brand for free. We have always been puzzled with the low valuations in Korea but this is astounding for an owner of global sporting brands.