Nike Financial Analysis



NIKE CO

Company Background

Nike is a company that has thoroughly embedded itself into the psyche of people around the world. It's a company that started with humble origins from selling footwear in the basement to becoming the behemoth in the athletic industry. Bill Bower man, University of Oregon track & field coach, and Phil Knight, middle-distance runner under Bower man co-founded Nike. Nike was first established as Blue Ribbon Sports in 1964 as a partnership and the name Nike was officially adopted on May 30, 1978. The infamous Nike Logo - Swoosh, was created for a fee of $35 by Carolyn Davidson, a graphics design student. In 1980, Nike becomes a publicly traded company with the completion of its Initial Public Offering of 2,377,000 shares of Class B Common Stock on New York Stock Exchange with the stock symbol NKE. Today, Nike employs over 38,000 people across the globe, and has net revenue in excess of $21 billion (Annual report on form 10-K , 2006).

Nike Company

Nike is a consumer products company, the relative popularity of various sports and fitness activities and changing design trends affect the demand for our products. Nike must therefore respond to trends and shifts in consumer preferences by adjusting the mix of existing product offerings, developing new products, styles and categories, and influencing sports and fitness preferences through aggressive marketing. Failure to respond in a timely and adequate manner could have a material adverse effect on our sales and profitability (Gallagher, 2006). This is a continuing risk.

The Nike brand operations are based on internal geographic organization. Each of the Nike Brand geography operates predominantly in one industry: the design, development, marketing and selling of athletic footwear, apparel, and equipment (Pearce & Robinson, 2005). Effective June 1, 2009, Nike began operating under a new organizational structure for the Nike brand, which consists of the following six geographies: North America, Western Europe, Central & Eastern Europe, Greater China, Japan, and Emerging Markets. In fiscal 2011, non-U.S. sales (including non-U.S. sales of our Other Businesses) accounted for 57% of total revenues, compared to 58% in fiscal 2010.

2011 Revenue by Geographic Segment

North America-35%

Western Europe-20%

Central and Eastern Europe-6%

Greater China-9%

Japan-5%

Emerging Markets-11%

In fiscal 2011, sales in the United States including U.S. sales of our Other Businesses accounted for approximately 43% of total revenues, compared to 42% in fiscal 2010 and 2009 (Nike , Inc., 2011). Our Other Businesses were primarily comprised of our affiliate brands; Cole Han, Converse, Hurley and Umbra (which was acquired on March 3, 2008); and Nike Golf. Nike estimate that we sell to more than 20,000 retail accounts in the United States. The Nike brand domestic retail account base includes a mix of footwear stores, sporting goods stores, athletic specialty stores, department stores, skate, tennis and golf shops, and other retail accounts. During fiscal 2011, our three largest customers accounted for approximately 23% of sales in the United States.

Fiscal 2011 was a rewarding and challenging year. NIKE, Inc. delivered record revenue and ...