Although Nike (NYSE:NKE) is mainly known for its athletic shoes, the company owes about 26% of its value to the sports apparel that it sells under the Nike brand. Nike-branded garments currently account for about 4% of the global sports apparel market. 
Nike is the world’s largest manufacturer of athletic footwear, apparel and equipment by sales. The company reported revenues of nearly $18.5 billion in calendar year 2009, far ahead of competitors like Adidas AG (ADDYY) and Puma (ETR:PUM). Nike sells its products under several brands, including Nike, Nike Golf, Converse, Cole Haan, Umbro and Hurley.
We estimate that Nike’s sports apparel share could rise to at least 6% during the Trefis forecast period. We have priced this expected growth into our $67.82 stock price estimate for Nike. Our analysis follows below.
- For Athletic Wear Vendors, How Athleisure Can Continue To Grow By Remaining “Trendy”
- Under Armor And The Future Of “Wearables”
- How China Could Be The Key Driver Of Nike’s Future Revenues
- What’s In Store For Lululemon This Year?
- Nike Earnings: Company Delivers Another Strong Quarter Despite Currency Headwinds
- Nike Pre-Earnings: Growth Momentum Likely To Continue Going Forward As Sales Improve Globally
Apparel vs. shoes
Nike-branded apparel is the company’s second-most valuable business after the footwear division, which accounts for 44% of our stock price estimate. Nike’s 4% share of the $122 billion global sports apparel market  is small compared to its 16% share of the worldwide athletic shoe market. However, the global sports apparel market is estimated to be twice the size of the global sports footwear market, so even a small share adds significant value to Nike’s stock.
The charts above show our estimates for Nike’s share of the global sports apparel market and the overall market size. You can drag the trend-lines to create your own estimates and see how they impact the company’s stock value.
We think Nike’s global sports apparel share could exceed 6% by the end of our forecast period. We base this expectation on two opposing factors. On the one hand, Nike is adept at leveraging its marketing and brand strengths along with its intense focus on R&D. On the other hand, Nike’s sales tend to be limited by the premium nature of its products.
One reason why we’re conservative about Nike’s growth prospects in the global sports apparel market is that apparel shoppers tend to be more price-sensitive than shoe shoppers. Because most customers buy multiple apparel products, they are often not in a position to pay premium prices for all their apparel. Nevertheless, Nike’s strong marketing and branding should allow it to make modest apparel share gains in coming years.
 Calculated based on reported Nike apparel revenues in SEC filings and our market size estimates
 Calculated based on press releases on the global sports market from the NPD Group, a market research firm.