Below are key drivers of Nike's value that present opportunities for upside or downside to the current Trefis price estimate for Nike:
For additional details, select a driver above or select a division from the interactive Trefis split for Nike at the top of the page.
Nike Inc. is the largest manufacturer of athletic footwear, apparel, and equipment worldwide, by sales, with close to $33.5 billion in revenues in 2016. The company sells its products under several brands which include Nike, Nike Golf, Converse, Hurley, etc. It typically outsources manufacturing of its products to Asia, and focuses on innovation and designing of products. Previously, Nike offered its products through two additional brands, i.e. Cole Haan and Umbro. It later sold these two brands as they were not complementing Nike's brand image.
The primary sources of Nike's value are footwear and apparel sold under the Nike brand, and together they contribute about 80% of Nike's value. Nike Brand Footwear is more valuable than Nike Brand Apparel and Converse Brand Footwear for the following reasons:
Nike branded footwear commands about an 23% share in the $81.4 billion global sports footwear market in 2016. As the economy improves in the U.S. and Europe, and demand increases in China and emerging markets, we expect this share to continue to rise. With aggressive marketing and innovation, Nike branded footwear has been able to capture a significant chunk of the global sports footwear market, which we expect to increase to $84 billion by the end of the Trefis forecast period.
In comparison, the global sports apparel market stood at about $155 billion in 2016. Nike, with its approximate 5.8% share, generated close to $9 billion in revenues in Nike branded apparel in 2016. We expect Nike to continue gaining share in this market driven by innovation, heavy marketing, and capitalizing on sports events to create higher demand of its products.
Nike Brand Footwear has a share of 24% versus a mere 2% for Converse Brand Footwear. This is because Nike Footwear is a more established brand with more than 40 years of experience. Converse still has a long ways to go before achieving Nike's popularity. In addition, the company does aggressive marketing and advertising for its Nike brand footwear by signing endorsement deals with famous athletes that gives high visibility to its flagship brand.
In the footwear business, producers and distributors jointly earn a profit per shoe of about 12% while retailers earn a profit of 13%. By selling through its own retail stores, Nike is able to capture both margins. The total number of company owned stores for Nike has increased from about 486 at the end of fiscal year 2007 to 900+ at the end of 2016. Just by looking at the numbers, one can see how much Nike is focused on growing their DTC networks and increasing sales in the stream.
Furthermore, it has recently opened a new 55,000 sq ft store in New York's prime Soho area that offers customers a unique and immersive shopping experience. Another such store is expected to open on Fifth Ave.
In the last few years, demand for low-performance footwear in the U.S. and Europe has grown significantly. Low-performance footwear refers to footwear that is not intended for athletic use. In this segment, Nike faces competition from low cost manufacturers that are trying to establish a foothold in the U.S. and other international markets. Nike has gradually increased its focus on selling low-performance footwear through its Converse and Hurley brands. However, the brand is facing stiff competition from competitors like Adidas that threaten to level the playing field.
With the rapidly growing economies of China and other emerging markets such as Brazil, these regions have emerged as key markets for Nike. The company is experiencing strong growth in virtually every one of its business segments in these regions, and the trend is expected to carry forward. China in particular is leading the charge with immense growth coming in from the region at a time when demand in North America is shrinking marginally.
On paper, Nike (NYSE:NKE) has posted a good quarter with earnings and revenues beating the consensus estimates by a comfortable margin. The top line was driven primarily by higher sales volumes in the international markets, most notably in Greater China and Europe. ...More
Nike (NYSE:NKE) is all set to report its earnings for Q2 2018 on 21 December, right in the midst of the busy holiday season. The company faced a pretty tough time in 2017, and a similar lull seems to be continuing into this year as well. The wholesale revenues slump in the U.S., that has persisted for some quarters now, continues to weigh on the company's financials. ...More
Activewear, or the 'Athleisure' trend, has become so popular, it has carved out a niche for itself in the clothing industry, while winning an entry into the Merriam-Webster dictionary, which defines it as "casual clothing meant to be worn both for exercising and for general use. ...More
Nike (NYSE:NKE) is all set to report its full year earnings for FY 2017 on 29 June. The company has seen some tough times in the year so far. Growth in the U.S. has slowed down dramatically in the recent past, while Nike faces rising pressure from rivals such as Adidas and Under Armour, especially in the footwear business. Growth in the U.S. ...More
A recent Bloomberg report suggests that Nike (NYSE:NKE) has entered into a partnership with Amazon (NASDAQ:AMZN) to sell its products directly on the latter’s platform. Currently Nike products available on Amazon’s e-commerce site are sold by third party sellers through the Amazon Marketplace. ...More
The apparel industry seems to have shied away from the technology revolution hitting just about every other industry. Despite substantial engineering advances, this industry is as labor-intensive today as it was a century ago. ...More
Nike (NYSE:NKE) is a company that, at the moment, seems to be wading through troubled waters. Apart from a slumped U.S. apparel market, the company has also been losing out to competition like Under Armour and Adidas in the footwear market. ...More
Nike (NYSE:NKE) is a company that requires no introduction. The brand has established itself as a household name synonymous with great sports apparel and footwear, complete with a celebrated following the world over. ...More
In what was deemed to be a make or break quarter for the company, Nike (NYSE:NKE) performed exceedingly well, surpassing earnings expectations by a large margin. Despite facing tough competitive conditions and overall weak demand in the market, the company has managed to stand its own and produce strong results this time around. ...More
Nike (NYSE:NKE) is all set to report its third quarter earnings this week. So far in the year, the company has managed to beat consensus revenue and earnings estimates consistently. That said, the stock price has taken a hit in the recent past on the back of a lackluster future order performance and a slowing apparel market. ...More
As it looks to gain market share from Adidas in the high potential middle eastern market, Nike (NYSE:NKE) is working on innovative products to woo customers. ...More
Recently JCPenney announced that it is featuring designated Nike (NYSE:NKE) shops within more than 600 of its stores. These 500 square feet areas will be located within the men’s section of JCPenney as it looks to bolster its active wear offerings. ...More
Throughout the year, Nike (NYSE:NKE) has managed to beat the consensus revenue and earnings estimates. However, the stock price has tumbled by almost 20% since its August high. The company has recently been struggling with increased competition from a resurgent Adidas and is facing pressure from Under Armour in its basketball division in North America. ...More
Nike (NYSE:NKE) is an apparel giant that currently dominates the sportswear market. That said, over the past few years, Under Armour (NASDAQ:UA) has made advances in its businesses leading to significant gains in market share across all segments. ...More
Nike (NYSE:NKE) posted a better-than-expected quarter, this time around beating consensus estimates in both revenues and earnings. Revenues rose 6% year over year on the back of a strong performance globally, both in footwear and apparel. The company's shares rallied up almost 5% after the call. ...More
Nike (NYSE:NKE) is all set to deliver its Q2 earnings on the December 20th. (Fiscal years end with May.) Thus far in 2016, has delivered strong results all three quarters. In its most recent quarter (ended August 31st), the company posted strong numbers, beating consensus estimates in both revenues and earnings. ...More
Nike (NYSE:NKE) has delivered strong numbers all three quarters thus far, in CY 2016. In its most recent quarter (Q1 2017), the company posted strong figures, beating consensus estimates in both revenues and earnings. Despite this, the stock price has fallen by almost 20% since the beginning for the year. ...More
The health revolution has taken the U.S. by storm, as is evident from the paradigm shift in two indicative industries, fast food and athletic wear. Not only are people more aware of the detrimental effects that fast food have on their well being over the long term, but also how it diminishes their ... ...More
Nike's (NYSE:NKE) stock price has dropped by almost 6% since the last earnings was announced this week on the back of weak future orders and bloated inventory figures. Excluding currency fluctuations, the company has seen a fall in future orders by about 5% in the U.S. Overall the sportswear giant reported a 3% drop in future orders worldwide. ...More
Nike (NYSE:NKE) recently delivered solid fiscal Q1 2017 earnings, managing to beat revenues and earnings expectations by wide margins. (Fiscal years end with August.) However, its shares fell by close to 3% yesterday over concerns of a lower future orders figure, in fact missing analyst order estimates for the third quarter in a row. ...More