NIKE Is Taking Over the World

NIKE Is Taking Over the World

It's true. NIKE (NYSE: NKE) is taking over the world.

Consider briefly the business NIKE is currently doing. According to a press release from June 28, 2011, seven of the eight major brand sectors listed by NIKE were showing positive growth over the prior fiscal year; only golf was down (four percent) while five categories - running, basketball, men's training, women's training and action sports - were up double digits.

In that statement, NIKE Brand President Charlie Denson said, "Our ability to be authentic, stay connected, and remain distinctive through innovating across all areas of our business is a definitive competitive advantage."

Staying connected hasn't been a problem. NIKE continues to put their logo on the shoes, clothes and even bathing suits of some of the most recognized names in professional sports.


Consider some of the basketball superstars representing the NIKE brand:

  • Kobe Bryant
  • LeBron James
  • Dirk Nowitzki
  • Kevin Durant
  • Blake Griffin
  • Carmelo Anthony
  • Dwyane Wade
  • Amar'e Stoudemire
  • Danny Granger
  • Zach Randolph

Those are just ten of the over 270 players that wear NIKE shoes when they take the court, and we didn't even mention other top-tier All-Stars like Chris Bosh, Luol Deng or Carlos Boozer, or WNBA stars like Maya Moore, Diana Taurasi and Sylvia Fowles.

Oh, and the brand most of these players are representing? Jumpman... which happens to still bear the logo of, and carry association with, the greatest player of all-time: Michael Jordan. Also representing the Jordan Brand in others sports are:

  • Derek Jeter and CC Sabathia (MLB)
  • Denny Hamlin (NASCAR)
  • Dwight Freeney and Andre Johnson (NFL)

And the fact that the golf sector was down only four percent to date with the Japanese market being decimated by the tsunami earlier this year and the face of that brand, Tiger Woods, being seen in divorce court more than on a golf course is pretty amazing. On the front page of NIKE.com, featured in a photo for women's athletic clothing are tennis star Maria Sharapova and soccer star Hope Solo.

Another piece of the pie to consider as well is that three of NIKE's four subsidiary companies showed double-digit growth as well. Cole Haan, Converse and Hurley were up over ten percent year-to-date, while Umbro was up only two percent.

They're everywhere folks.

The press release linked above made headlines in late June because NIKE's stock took a hit earlier in the summer when increased expenses (cost of labor, textiles) impacted the company's net growth in the first half of the 2011 fiscal year. Even while being forced to adjust their projected earnings for the current fiscal year, NIKE was bold enough to increase their financial outlook for 2015 t0 $28-30 billion; despite market conditions in most of the retail sector being negative, a company currently at $20 billion in revenue is projecting a 50 percent increase over the next four years.

Why is NIKE so excited about their next few years?

All of the great names and faces we've already talked about isn't even the tip of the iceberg.

In the fall of 2012, NIKE adds a brand category that could become one of the top three performing categories in the company... and devastate a competitor.

Back in mid-October of 2010, the National Football League announced that they would be replacing Reebok as the league's official partner for jerseys and sideline apparel, replacing them with NIKE. New Era won the rights to sideline hats and visors, taking that business away from Reebok as well.

What does this mean to NIKE? According to The SportsBusiness Journal Daily, "SportsOneSource estimates that Reebok 'had $500 million in NFL apparel sales [in 2009],' while Citigroup analyst Kate McShane estimated that Reebok's NFL contract accounts for $350 million of its $565 million in U.S. apparel sales."

NIKE has been given some leverage to alter the design of NFL jerseys in the deal. If you've been to a sports bar between the middle of August and Valentine's Day on a weekend, you know that any time a new jersey is released, thousands fly off the racks. How many orange alternate or throwback Bears jerseys are seen wandering around any Buffalo Wild Wings on any given Sunday in the fall? Not to mention when big-name players switch teams...

If Reebok was moving $565 million in apparel in the U.S., NIKE could conservatively look to make that number $600-700 million just in 2012, the first season that NIKE has the NFL rights.

Adidas, which owns Reebok, has been strong in their approach to move the Reebok brand in the direction of training and away from professional sports. Reebok and Adidas still have uniform rights for the NHL, MLS and NBA, but how long will it take for NIKE to outbid those contracts as well if Adidas continues to place their focus elsewhere?

NIKE's big right now, but just wait. It appears that this is NIKE's world, and we're all paying to play in it.

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