NIKE (NYSE:NKE) is a seller of athletic footwear and athletic apparel worldwide. The company sells its products to retail accounts, through NIKE-owned retail stores and Internet sales, and through a mix of independent distributors and licensees, in approximately 190 countries around the world.
Nike has proven its solid strength and global potential, and a turnaround in China could boost earnings even higher. It is targeting revenue of $36 billion in fiscal year 2017 compared to its revenue of $25.31 billion in fiscal year 2013. The company is looking to expand its presence in the Western Europe region which contributed 16.3% in the fiscal year 2013. The company expects revenues from the segment’s Direct-to-Consumer (DTC) business to reach $5.0 billion by 2015 and $8.0 billion by 2017, primarily driven by increased e-Commerce sales as well as new store expansion.
Nike has a $36 billion goal to hit by 2017. It will be a mixture of Nike brand growth, women's apparel, and a nice boost from iconic shoe brand Converse that will lead the charge of what amounts to more than 40% sales growth between fiscal 2013 and 2017. Further, the company believes that its revenues for fiscal 2015 will reach the $30.0 billion mark, touching the higher end of its previously forecasted range of $28.0 billion to $30.0 billion.
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- NKE 15-Year Financial Data
- The intrinsic value of NKE
- Peter Lynch Chart of NKE
On a Constant Innovation Spree
Nike is continuously improving its products, so it can rightly be said that innovation plays a key role in its growth opportunities. Strong research and development, complementing innovation, expansion into trendy/fashion industry where not just athletes are targeted, but the general population where new competition can be met from alternative clothing lines, are some the measures taken by Nike to sustain its growth.
The next five-year plan can involve a shift in Nike's focus from traditional division in categories like footwear, equipment, etc., to individual sports, selling of other assortments like sunglasses, hats and other accessories. On the other hand, Nike's strong financial performance will help it to cash in on new innovation with its robust R&D. Apart from the main focus on athletic apparel and footwear Nike can make further development in casual wear items. There is also an opportunity to tap other market segments like Asian countries where disposable income is increasing and people are becoming more brand conscious.
Like all the great retail/consumer-focused companies, Nike has built a brand that customers know, trust and are willing to pay a little extra for. On top of that, Nike expanded its brand to the Jordan collection, which started as just shoes but is now its own line of clothing and accessories.
Quick Wrap Up
Nike has a high perceived value and is a hit among consumers who are brand conscious and are willing to pay a high price for high quality. It has a good brand reputation and is distinctively marked by its slogan Just Do It. It is a global brand and is the No. 1 sports brand in the world. It is a very competitive organization and boasts of a very good leadership. The company sponsors the top athletes and gains valuable coverage through the media. For the last 20 years there has been increase in demand for products in the sports clothing market which suggest that Nike will have a profitable investment if it continues business in the same industry. People are spending more on such products.
All in all, Nike will continue to perform well in 2014 and the coming years due to its brand strength and its ability to constantly stay relevant and on the cutting edge of fashion and athletic technology. Nike is expected to create value for its shareholders in the near future. Fitness consciousness, rising income levels in developing countries, the growing popularity of sports apparel for women as well as the trend towards stylish and comfortable sportswear are some of the factors that will add to the growth of Nike.