About Nike Retail Services, Inc.
NIKE, named for the Greek goddess of victory, is the world's #1 shoe and apparel company. It designs, develops, and sells a variety of products 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; it also sells sportswear under the Converse and Hurley brands. The company, which generates some 60% of sales outside the US, sells through more than 1,100-owned retail stores worldwide and an e-commerce site, and to thousands of retail accounts, independent distributors, and licensees.
NIKE-branded products, which account for about 95% of total revenue, are focused on six key categories: Running, NIKE Basketball, the Jordan Brand, Football (Soccer), Training, and Sportswear (sports-inspired lifestyle products).
NIKE footwear is the company's leading product offering, bringing in more than 60% of sales and led by the iconic Jordan Brand and other collections. NIKE Apparel accounts for about 30% of sales and NIKE Equipment (bags, sport balls, timepieces, digital devices, bats, protective equipment) adds another 5%.
Converse, Hurley, and other brands contribute the remainder of revenue.
NIKE is based near Beaverton, Oregon; it has a 400-acre site with more than 40 buildings. It also has regional headquarters in Hilversum, the Netherlands (for the EMEA region) and Shanghai, China (for the Greater China region) and branch offices and subsidiaries in more than 50 other countries.
In the US NIKE owns half a dozen significant distribution centers, four in Memphis, Tennessee, one in Dayton, Tennessee, and one in Indianapolis, Indiana. The most significant distribution facilities outside the US are located in Laakdal, Belgium; Taicang, China; Tomisato, Japan; and Incheon, Korea.
The company generates nearly 45% of sales in North America (mostly the US) with another quarter in Europe, the Middle East, and Africa. Greater China and the rest of the Asia-Pacific region and Latin America each account for about 15% of revenue.
Sales and Marketing
NIKE generates about two-thirds of sales from wholesale customers such as retail accounts (footwear and sporting goods stores; athletic specialty stores; department stores; skate, tennis, and golf shops), independent distributors, and licensees. It also sells directly to consumers through a strong global network of company-owned stores and its growing ecommerce site.
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. Total advertising and promotion expenses were about $3.8 billion, $3.6 billion, and $3.3 billion for fiscal years 2019, 2018, and 2017, respectively.
NIKE has seen solid revenue growth over the past five years with sales up nearly 30% since fiscal 2015. Net income has generally been on an upward trend, except in fiscal 2018 when it was impacted by the 2017 Tax Act; overall, profit is up about 25% over the past five years.
In fiscal 2019 (ended May) the company reported revenue of $39.1 billion, up 7% from the prior year. It saw growth in both the NIKE and Converse brands and across all geographies, particularly powered by the sportswear category. NIKE's smaller direct-to-consumer operations contributed as much to overall results as the much-larger wholesale operations, driven by year-over-year ecommerce sales growth of 35%.
Net income that year was $4 billion, more than double the $1.9 billion from fiscal 2018 when the company was hit with a substantial income tax expense as a result of the 2017 Tax Act.
Cash at the end of fiscal 2019 was $4.5 billion, an increase of $217 million from the prior year. Cash from operations contributed $5.9 billion to the coffers, while investing activities used $264 million, mainly for capital expenditures. Financing activities used another $5.3 billion for dividends to stockholders and stock repurchase.
With revenue growth slowing and intense competition from top rival Adidas, among others, NIKE has embarked on a transformation. It cut about 2% of its workforce (about 1,400 workers), consolidated six operating segments into four, and sharpened its focus on 12 key global cities (including New York, London, Beijing, and Shanghai) which it thinks will power growth through 2020. In addition, NIKE's transformation includes the Triple Double Strategy with the goal of doubling the impact of innovation, the speed to market, and the direct connection to consumers.
NIKE is looking to connect more directly with its customers by focusing on its NIKE Direct organization, which includes direct-to-consumer retail operations, Nike.com, and Nike+ apps and other digital products. The company's goal is for digital sales to double to 30% of total revenue. In addition to its digital focus, it is innovating within its product portfolio to better compete. NIKE has reduced its styles by 25% in order to more quickly offer new lines to customers and has already seen a positive response to newer platforms such as the Air VaporMax Flyknit (air-cushioned sneaker), Air Max 270 (air-cushioned lifestyle shoe), and Epic React (running shoe).
The company's wholesale business still accounts for the largest portion of NIKE's sales and it needs to strengthen those operations as sporting goods companies and mall retailers (traditional homes for NIKE products) continue to struggle with falling foot traffic and online competition. With that in mind, NIKE has identified a group of favored retailers (those that attract target customers and deliver exceptional customer experience) to receive exclusive products and more marketing support.
Mergers and Acquisitions
After a period of minimal acquisition activity, Nike has picked up the pace in 2018 with two smaller acquisitions designed to bolster its technology and ability to innovate. It purchased Israeli computer vision firm Invertex, which does 3-D body scanning, and northeastern US-based data analytics company Zodiac. Nike expects both transactions to enable its direct-to-consumer strategy to better serve customers.
Phil Knight, a good miler, and Bill Bowerman, a track coach who tinkered with shoe designs, met at the University of Oregon in 1957. The two men formed Blue Ribbon Sports in 1962 in an effort to make quality American running shoes. The next year they began selling Tiger shoes, manufactured by Japanese shoe manufacturer Onitsuka Tiger. They sold the running shoes out of cars at track meets.
The company rebranded as NIKE in 1972, named for the Greek goddess of victory. The NIKE "Swoosh" logo was designed by a graduate student named Carolyn Davidson, who was paid $35. The same year NIKE broke with Onitsuka in a dispute over distribution rights.
It went public in 1980.
ONE BOWERMAN DR
Beaverton, OR 97005-0979
Phone: 1 (503) 671-6453
Employer Type: Privately Owned
Sec: John F Coburn
Procurement Team Member: Matt Searfus
Assistant To Ken Kosinski: Irina Stepanyants
Employees (This Location): 300
Employees (All Locations): 1,100
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