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 variety 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 930-owned retail stores worldwide, an e-commerce site, and to thousands of retail accounts, independent distributors, and licensees.
NIKE is based near Beaverton, Oregon; it has a 394-acre site with 44 buildings. In fiscal 2015 (May year end) North America accounted for 45% of sales), Western Europe (19%), Emerging Markets (13%), Greater China (10%), Central & Eastern Europe (5%), and Japan (2%). Other operations account for the rest of its revenues.
In the US, NIKE owns a full product line distribution center in Memphis, Tennessee, and four other distribution centers, three of which are leased, also in Memphis. NIKE Brand apparel and equipment are also shipped from its Foothill Ranch, California distribution center, which the company leases. The company also owns or leases distribution and customer service facilities outside the United States. The most significant are the distribution facilities located in Laakdal, Belgium; Taicang, China; Tomisato, Japan and Incheon, Korea, all of which the company owns.
The company has branch offices and subsidiaries in Argentina, Australia, Austria, Belgium, Bermuda, Brazil, Canada, Chile, China, Croatia, Cyprus, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hong Kong, Hungary, India, Indonesia, Ireland, Israel, Italy, Japan, Korea, Malaysia, Mexico, New Zealand, the Netherlands, Norway, Panama, the Philippines, Poland, Portugal, Russia, Singapore, Slovakia, Slovenia, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Taiwan, Thailand, Turkey, the UAE, the UK, the US, Uruguay and Vietnam.
NIKE operates in six geographic segments: North America, Western Europe, Central & Eastern Europe, Greater China, Japan, and Emerging Markets. Almost all of the company's branded footwear and apparel is made by third-party manufacturers outside of the US, mainly in Vietnam, China, and Indonesia. Its equipment products are made both in the US and abroad.
In fiscal 2015, sales in the US (including sales of its Other Businesses unit) accounted for about 45% of total revenues. Converse and Hurley, its affiliate brands, and NIKE Golf comprise NIKE's Other Businesses. NIKE sells to thousands of US retail accounts, which include a mix of footwear stores; sporting goods stores; athletic specialty stores; department stores; skate, tennis, and golf shops; and other retail accounts. During 2015, NIKE's three largest customers accounted for more than 25% of US sales.
Non-US sales for the behemoth brand generated roughly 55% of total revenues. NIKE sells its products to retail accounts through its own Direct to Consumer (DTC) operations and through a mix of independent distributors, licensees, and sales representatives worldwide. The company sells to thousands of retail accounts and operates 45 distribution centers overseas.
Footwear accounted for 60% of the company's revenues in 2015.
Sales and Marketing
Worldwide, NIKE sells its products to retail accounts, through NIKE-owned retail stores and Internet websites, and through a mix of independent distributors and licensees. NIKE also sells its products to wholesale customers and directly to consumers through its Direct to Consumer operations. It also enters into licensing agreements that permit unaffiliated parties to make and sell certain apparel, digital devices and applications, and other equipment designed for sports activities.
The company sells to thousands of retail accounts and ships products from 45 distribution centers outside of the US.
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 2015 the company spent more than $3.03 billion on advertising and promotions, up from about $2.75 billion the prior year.
During fiscal 2015, NIKE's three largest customers helped to bring in 26% of US sales. During the same reporting period, the company's three largest customers outside of the US accounted for some 6% of total non-US sales.
During the past decade, NIKE's sales and earnings per share have grown 10% and 13%, respectively, on an annual compounded basis. Its return on invested capital has increased from 23% to 28% and its expanded gross margins by about 150 basis points.
The company saw strong growth in revenues over the last five years. In 2015 NIKE's revenues increased by 10% due to sales increases across a number of markets, including North America (12%), Western Europe (15%), Central and Eastern Europe (2%), and Converse (18%).
The increase in NIKE Brand footwear revenues for fiscal 2015 was driven by strong performance in its Sportswear, Basketball, Running and Football (Soccer) categories. Footwear unit sales increased by 9%; the higher selling price per pair contributed approximately 8% points of footwear revenue growth. The increase in average selling price per pair was driven by a shift to higher-priced products and the favorable impact of growth in NIKE's higher-priced DTC business. NIKE Brand apparel revenues for fiscal 2015 was driven by growth in most key categories, led by Sportswear, Running, and Women's Training.
The company’s net income has followed the revenue trend over the last five years. In 2015, net income increased by 21% due to higher revenues.
NIKE’s operating cash flow in fiscal 2015 increased by 55%.
NIKE e-commerce revenues grew by 55% in fiscal 2015 to more than $1 billion, fueled by an expansion to new countries and supported by infrastructure investments.
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.
The company continues to diversify one of its apparel technologies, Dri-FIT, which is the adaptive foundation of everything from shirts to socks. Key Dri-FIT performance products introduced in 2015 included NIKE Pro Hyperwarm, Running Dri-FIT Knit and the NIKE Pro Bra Collection.