Fleet-of-footwear NIKE, named for the Greek goddess of victory, is the world's #1 shoe and apparel company. NIKE designs, develops, and sells a slew of products and services to help in playing basketball and soccer (football), as well as in running, men's and women's training, and other action sports. Under its namesake brand, NIKE also markets sports-inspired products for children and various competitive and recreational activities, such as golf, tennis, and walking, and sportswear by Converse and Hurley. NIKE sells through more than 800-owned retail stores worldwide, an e-commerce site, and to thousands of retail accounts, independent distributors, and licensees. Chairman Philip Knight controls the company.
NIKE's operations are divided among six geographic segments: North America, Western Europe, Central and Eastern Europe, Greater China, Japan, and Emerging Markets. Almost all footwear and apparel is made by third-party manufacturers outside of the US, mainly Vietnam, China, and Indonesia. In 2012 US sales generated approximately 42% of total sales. Foreign sales accounted for 58% of sales.
Broadly, the company's strategic operations consist of its NIKE-brand retail and wholesale businesses, and other business. Retail business, albeit 17% of all NIKE brand sales, continue to grow faster than wholesale business (83% of NIKE-brand sales). NIKE's other businesses (13% of sales) include affiliate brands Converse (known for its classic and retro-style shoes); Hurley (sports apparel for skateboarding, snowboarding, and surfing); NIKE Golf; and Umbro (UK soccer related footwear, apparel and equipment). Although revenues for other businesses increased by 11% in 2012 versus 2011, NIKE reevaluated its long-term growth strategy and announced plans in late 2012 to divest its Cole Haan and Umbro businesses. Indeed, NIKE has agreed to sell Umbro to Iconix Brand Group for $225 million. The sale is expected to close by the end of 2012. The company in 2013 completed the sale of Cole Haan to London-based private equity firm Apax Partners for $570 million.
Sales and Marketing
NIKE markets its footwear and other products globally through diverse advertising and promotional programs and campaigns, including print, social media, online advertising, and endorsement contracts with celebrity athletes. In fiscal 2012 (ends May) the company spent more than $2.7 billion on advertising and promotions, up from nearly $2.5 billion the prior year. (Endorsement compensation totaled $294 million for the year.) The firm is known for its use of celebrity endorsers, including golfer Tiger Woods and quarterback Michael Vick, in its campaigns. In 2012 NIKE cut its ties to cyclist Lance Armstrong in the wake of a doping scandal.
Over the past 10 years, NIKE's sales and earnings per share have increased 9% and 15%, respectively, compounded annually. In fiscal 2012 (ends May) earnings rose 4% atop a 16% jump in sales over the prior year. Despite the economic downturn that has slowed consumer spending, results were buoyed by an upswing in demand for NIKE brand products coupled with higher prices (aimed to counter increased material and labor costs) across all NIKE brand geographies, sports, and product categories. Earnings growth, or the lack thereof, was attributed to an increase in the company's tax rate.
In addition to brand strength, NIKE has fueled momentum by launching a stream of new products, including the NIKE Fuelband, a digital device to track daily activity, and the Flyknit, a technology designed to lighten footwear weight and improve fit. In anticipation of replacing rival Reebok as the maker of NFL-branded apparel and uniforms, NIKE also expanded its offerings with new high-performance uniforms for all 32 NFL teams.
NIKE is led by Mark Parker, a longtime brand executive with the company, who was named president and CEO in 2006. Parker succeeded short-lived CEO Bill Perez, who replaced NIKE co-founder Philip Knight in 2005.
Co-founder and chairman Knight controls the company with about 75% of NIKE's Class A common stock.