Shane Dempster Cara Jacaruso Joseph Nardi Fan Yang Lauren Zhu NIKE, Inc. (NKE) Shane Dempster Cara Jacaruso Joseph Nardi Fan Yang Lauren Zhu
Company Profile NIKE, Inc. NYSE: NKE
Industry profile, trends, key indicators Innovation, technology, marketing, and the sports cycle are important drivers of the global sports apparel and footwear markets. Global market for sports apparel is nearly twice as large as the footwear market, and totals over $135 billion. NIKE's strong brand and dominance in athletic footwear serve as a competitive advantage in its aims to capture the underserved women's athletic apparel market. Unfavorable foreign currency exchange rate movements (particularly devaluation of the Japanese yen) have led to revenue declines in Western Europe, China and Japan. Sports apparel market consists of activewear (purchased with intent to be used in a sport), as well as lifestyle or casual wear. Technologically superior performance products attempt to convey the idea of extraordinary ability to the wearer and are the root of the marketing campaigns aimed at lifestyle consumers (which NIKE has in its apparel)
Company Profile Business description Key financials ($ millions) Largest seller of athletic footwear and athletic apparel in the world Principal business is the design, development, marketing, and selling of athletic footwear, apparel, equipment, accessories and services. Sells its products through retail accounts, internet websites, independent distributors, and licensees, in virtually all countries around the world. Top-selling footwear is NIKE Sportswear, Running, Basketball, Football (Soccer), and kids’ shoes. Revenue: $ 25,313 Sales Growth: 4.91% Net Income Growth: 10.84% Ownership structure Stock chart Class A 20% Class B 80 Top Class A Holders Top Class B Holders Philip H. Knight 75.60% Vanguard 5.79% State Street 4.85 Fidelity 4.77 BlackRock 3.82 Capital Research 3.70
SWOT Analysis Strengths Weaknesses Opportunities Threats Robust market position bolstered by strong brand equity Competent technical innovation in products enhancing Nike's competitive advantage and brand equity Broad distribution network World’s leading brand for sports shoes and apparel Dependence on third-party manufacturers Limited control over contract manufacturers Limited range of products Opportunities Threats Association with NFL would consolidate Nike’s leadership position in the US Growth opportunities in India Brand reorganization initiative Growth in global footwear market Product expansion in areas like more concentration in sunglasses, sportswear etc. which gives high profit Intense competition Growing counterfeit goods market Adaption of new techniques and innovation by other brands Economic downturns * Excerpts from COMPANY PROFILE NIKE, Inc. dated: 04-29-2013
Analysis Overview Recent News Net Sales Net Income NIKE is the largest seller of athletic footwear and athletic apparel in the world, and its principal business activity is the design, development and worldwide marketing, and selling of athletic footwear, apparel, equipment, accessories and services. NIKE sells its products through retail accounts, internet websites, independent distributors, and licensees, in virtually all countries around the world. Gearing up to enter smart watch sector in early 2014. Has established itself as one of the top-five most followed brands on Instagram, which is owned by Facebook, to connect with young and wealthy consumers on the site for lifelong sales. Rebounding steadily since market fell in Jan., and traders are looking for the gains to continue in the next two months. Sold its Umbro business to Iconix Brand Group for $225 million in Nov. 2012, and its Cole Haan business to Apax Partners for $570 million in Feb. 2013 Net Sales Net Income 7.0% CAGR 14.0% CAGR
Sample Material Nike (NKE)
Business Profile JORDAN BRAND CONVERSE HURLEY Business description Key Brands NIKE is the largest seller of athletic footwear and athletic apparel in the world. NIKE, Inc. was incorporated in 1968 under the laws of the state of Oregon. The company’s current CEO is Mark G. Parker. Business Segments The Company’s reportable operating segments for the NIKE Brand are: North America, Western Europe, Central & Eastern Europe, Greater China, Japan, Emerging Markets The company reports results of operations in the following reportable product lines: Running, Basketball, Football (Soccer), Men’s Training, Women’s Training, NIKE Sportswear, Action Sports Operations 110 sales offices and approximately 90 administrative offices worldwide. 750 retail stores worldwide, which consist primarily of factory outlet stores. Distribution Channels Products sold through retail accounts, internet websites, independent distributors, and licensees, in virtually all countries around the world. During fiscal 2013, our three largest customers accounted for approximately 25% of sales in the United States. JORDAN BRAND CONVERSE HURLEY
Historical financial performance Historical Performance Fiscal Year July 29, 2013 Breakdown Sales $25,313MM Stock Ownership EBIT $3,272MM*
Historical financial performance Historical Performance Ownership structure Institutions 83.28% Private 16.72% Top 5 Insider Trades Top 5 Holders Mark G. Parker Douglas G. Houser Trevor A. Edwards Donald W. Blair Charles D. Denson Vanguard 5.83% State Street 4.88% FMR, LLC4.75% CRGI 3.72% BNY Mellon3.27% * Numbers as per S&P Capital IQ Historical Financial Discussion and Analysis According to Nike’s 2013 Annual 10K report, Nike historically experiences revenues in the first and fourth fiscal quarters to have slightly exceed those in the second and third quarters. “However, in the mix of product sales, it may vary considerably as a result of changes in seasonal and geographic demand for particular types of footwear, apparel, and equipment.” In 2013, Nike increased their sales of brands such as Converse and Hurley from 42% to 45% in the United States market. Hence, the major things moving the numbers were the selling of more goods to retail and sporting good stores across the United States. During the fiscal year of 2013, the three largest customers of Nike accounted for approximately 25% of sales in the United States. Operating expenses are increasing, especially in the United States market, with the operating overhead for the fiscal year of 2013 being $5,035,000. Ultimately, by selling more items to retail stores and discount sporting good stores, Nike is continuing to increase sales, as shown in the fiscal year of 2013.