Nike’s (NYSE:NKE) global footwear market share has consistently grown over the years reaching about 17% at the end of 2010. We attribute this success to its strong marketing and innovation as well as growing demand from emerging markets like China. But rising input costs and air freight have been a concern for Nike, which contributed to the company providing lower gross margin guidance by 50 basis points in 2011 vs. 2010. (See Nike’s Earnings Re-Iterate Gross Margin Pressure) Nonetheless, we believe the company has bright prospects in new markets like China that will give it an edge over rivals like Sketchers (NYSE:SKX), Adidas AG (ETR:ADS), Steve Madden (NASDAQ:SHOO) and K-Swiss (NASDAQ:KSWS).
Innovation with Sustainability Key for Nike
Nike has continuously endured and focused on innovation for its products which makes it such a popular brand. The company made shoes that communicate information regarding distance and speed to the runner’s iPod for instance. The “green rubber” that it developed in the early part of the decade lowered production costs and toxic emissions during manufacturing and is an example of innovation tackling the issue of sustainability. 
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Nike maintains that its products are made from recycled, renewable materials and are chemically optimized to reduce the use of toxic substances.  This “going green” trend will definitely continue to boost its brand image and market share in the long run.
In an annual CNN Money issue, Nike was ranked 3rd in Fortune’s World’s Most Admired Companies in Innovation for 2011 preceded by Apple and Google. .
Immense Opportunity in China
China is not only one of the key manufacturing plants for Nike but also a profitable one to sell its products. With an opening economy, China presents a lucrative growth opportunity that can help Nike gain share in the sports products market. The company opened its biggest distribution center in Asia in the Jiangsu province of China, and according to the company, the center will optimize distribution time and logistics ensuring faster delivery of products to its Chinese consumers. 
We expect it to continue benefiting from strong demand in China. While we anticipate Nike’s global footwear market share will increase gradually to over 20% by the end of our forecast period, Trefis members predict the share will be in the range of 21%-22%, implying ab0ut 5% upside to our NKE stock price estimate and a total return of 15%.
We currently have a Trefis price estimate of $76.52 for Nike’s stock, about 10% above the current market price.
See our complete analysis for Nike.Notes: