Executive Summary

Collin J. Myers BUS-458

Spring 2013

Collin J. Myers

II

Nike Executive Summary

NIKE, Inc. is the world’s leading designer, marketer and distributer of athletic

footwear, apparel, equipment and accessories for a wide variety of sports and fitness

activities. NIKE, Inc. sells, distributes and licensees its products in approximately 200

countries around the world. NIKE focuses its products in seven key categories:

Running, Basketball, Football (Soccer), Men’s Training, Women’s Training, NIKE

Sportswear and Action Sports. NIKE sells products through its NIKE Brand and Affiliate

Brands (Converse Inc., Hurley International LLC, Jordan Brand and Nike Golf).

Operating segments for the NIKE Brand are: North America, Western Europe, Central &

Eastern Europe, Greater China, Japan, and Emerging Markets.

NIKE is a consumer products company who specializes in the fast paced industry

of athletic footwear, apparel, and equipment. This industry is keenly competitive which

exposes NIKE to the risk of falling behind or not meeting the innovation standards of

customers. To stay on top of customer demand, NIKE must continue to innovate and

anticipate consumer preferences. Companies in this industry rely on a strong reputation

and brand image for worldwide recognition. If the NIKE Brand were to attract any

negative press, it could substantially affect their revenues and growth. NIKE’s strategy

is to achieve long-term revenue growth by creating innovative. “must have” products,

building deep personal consumer connections with our brands, and delivering

compelling consumer experiences at retail and online (DTC Businesses).

As a global leader in sportswear, NIKE is no stranger to the increasingly complex

and volatile environment of the global economy experienced in recent years. NIKE

products are all subject to the risks associated with overseas sourcing, manufacturing,

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and financing (virtually all NIKE footwear and apparel products are produced outside the

United States). The decline of global capital and credit market conditions threaten

NIKE’s business, operating results, and financial condition. During these times, NIKE

stands to remain focused squarely on business to expand profitable long-term growth

for its stakeholders. Nike plans to do this by continuing to innovate across all segments

of the company. Innovation at NIKE is about leveraging new ideas, expanding into new

spaces, driving through new channels and divesting to invest.

Despite the ongoing challenges in the economy, NIKE delivered record revenue

in fiscal 2012, out performing the past five fiscal years [Figure 1]. NIKE revenues grew

16% to $24.1 billion and net income increased 4% to $2.2 billion in fiscal 2012 [Figure

2]. Over the past four fiscal years, NIKE, Inc. has delivered a positive return on net

income despite being subject to ever changing tax and currency rates [Figure 3]. NIKE

Brand footwear continues to be the cornerstone of revenues, alone generating $13.4

billion [Figure 4]. In fiscal 2012, NIKE revenues were increased across all operating

segments [Figure 5]. North America contributed approximately 7 percentage points

($8.8B) [Figure 6], while the Emerging Markets and Greater China geographies

contributed 4 ($3.4B) and 2 ($2.5B) percentage points to the NIKE Brand revenue

growth [Figure 7 & 8].

NIKE continually invests in strategies they believe will deliver continued growth.

As a result, in 2012 NIKE reached agreements to sell two of its affiliate brands: Umbro

and Cole Haan. This will allow NIKE to focus on the highest-potential opportunities to

drive sustainable, profitable growth for shareholders.

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Figure 1

Figure 2

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Figure 3

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Figure 4

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Figure 5

Figure 6

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Figure 7

Figure 8

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