Nike based near Beaverton, Oregon, is the world’s leading designer, marketer and distributor of authentic athletic footwear, apparel, equipment and accessories for a wide variety of sports and fitness activities. NIKE Brand product (consumer products company) focuses offerings in eight key categories namely Running, Basketball, Football (Soccer), Men’s Training, Women’s Training, Action Sports, Sportswear and Golf. Nike also markets products designed for kids, as well as for other athletic and recreational uses such as cricket, lacrosse, tennis, volleyball, wrestling, walking, and outdoor activities.
NIKE is the largest seller of athletic footwear and athletic apparel in the world. It sells products to retail accounts, through NIKE-owned retail stores and internet websites, and through a mix of independent distributors and licensees throughout the world. All of their products are manufactured by independent contractors. Practically all footwear and apparel products are produced outside the United States, while equipment products are produced both in the United States and abroad.
Financials and Market scope
In fiscal 2014, United States has accounted for approximately 46% of total revenues of NIKE through 322 US retail stores, compared to 45% in fiscal 2013 and 42% in fiscal 2012 while non-U.S. sales shared 54% of total revenues, compared to 55% in fiscal 2013 and 58% in fiscal 2012 through 536 Non US retail stores. No single customer accounted for 10% or more worldwide net sales during fiscal 2014.
For the fiscal year ended on 31st May 2014 Nike had revenues of USD 27.79 billion and net profit was at USD 2.69 billion. Footwear, apparel and equipment contributed 58%, 29% and 6% respectively in fiscal 2014 revenue. Compared to fiscal 2013 revenue increased 9.79% and net profit was higher by 8.90%.The earnings per share was reported at USD 3.05 per share for 2014 as compared to USD 2.74 in the year 2013 (growth of 11.31%).
Nike is supplied by approximately 150 footwear factories located in 14 countries. The largest single footwear factory accounted for approximately 5% of total fiscal 2014 NIKE Brand footwear production. All footwear is manufactured outside of the United States by independent contract manufacturers who often operate multiple factories. In fiscal 2014, contract factories in Vietnam, China, and Indonesia manufactured approximately 43%, 28%, and 25% of total NIKE Brand footwear, respectively. They have manufacturing agreements with independent factories in Argentina, Brazil, India, and Mexico to manufacture footwear for sale primarily within those countries. In fiscal 2014, five footwear contract manufacturers each accounted for greater than 10% of fiscal 2014 footwear production, and in aggregate accounted for approximately 67% of NIKE Brand footwear production in fiscal 2014.
It is also supplied by approximately 430 apparel factories located in 41 countries. The largest single apparel factory accounted for approximately 7% of total fiscal 2014 NIKE Brand apparel production. Their apparel is manufactured outside of the United States by independent contract manufacturers who often operate multiple factories. In fiscal 2014, most of this apparel production occurred in China, Vietnam, Thailand, Indonesia, Sri Lanka, Pakistan, and Malaysia. In fiscal 2014, one apparel contract manufacturer accounted for greater than 10% of fiscal 2014 apparel and the top five contract manufacturers in aggregate accounted for approximately 34% of NIKE Brand apparel production in fiscal 2014.
The athletic footwear, apparel, and equipment industry is highly competitive on a worldwide basis. Nike is facing competition from Adidas, V.F. Corp., Puma, Li Ning, and Under Armour, among others. It also competes with a number of vertical retailers such as lulu lemon athletic and Uniqlo. The intense competition and the rapid changes in technology and consumer preferences in the markets for athletic and leisure footwear and apparel, and athletic equipment, constitute significant risk factors in its operations.
Nike is listed on New York stock exchange (NYSE) and current price is at USD 100.84. The company has a debt equity ratio 0.11 at the end of 2014 and has a current market capitalization of USD 79 billion with a Price to Earnings multiple of 26.61. The Market Capitalization to Sales ratio is 2.85. The company has declared dividend of USD 0.93 in fiscal 2014.
Fiscal 2015 second quarter results
For second quarter ended on 30th November 2014 Revenues for Nike increased 15 percent to USD 7.4 billion.The increase was primarily attributable to a shift in mix to higher margin products, continued growth in the higher-margin Direct-to-Consumer (DTC) business and a modest benefit from foreign exchange. Net income increased 23% to USD 655 million, Inventories for Nike was at USD 4.2 billion, up 11% from November 30, 2013.