Nike, Inc. is the
world's largest supplier and manufacturer of athletic shoes, apparel and other
sports equipment. The company employed about 62,600 people worldwide and in
2015, Nike's global revenue amounted to about 30.6 billion U.S. dollars. The
North American region of Nike generated the largest portion of the company's
revenue that year, approximately 13.74 billion U.S. dollars. In regards to that
figure, the Oregon based company's athletic footwear segment generated about
8.5 billion U.S. dollars.
Nike attributes a lot
of its success to the brands worldwide marketing campaign which uses
sponsorship agreements with celebrity athletes, professional sports teams and
college athletic teams to use their products and in return promote their
technology and design. In 2013, the Nike spent about 1.09 billion U.S. dollars
on advertising in the United States alone. As a result, Nike will continue to
be one of the most popular brands amongst men and women when it comes to
athletic apparel worldwide.
Footwear Revenues Account for 58.3% of Total Revenues
Though Nike makes a wide variety of products that include
everything from shirts and socks to basketballs and footballs, footwear is
still the core of its revenue. In fiscal 2014, footwear sales accounted for
58.3% of total revenues, leaving some other sectors in the dust:
Nike 2014 Revenues
Footwear
Apparel
Equipment
Other
Footwear16 208 (58.3%)
Highcharts.com
The Nike Swoosh Was Designed for $35
Nike company logo
The Nike swoosh (picture right) is easily one of the most
recognizable logos in the world. But the design of this famed symbol was
commissioned in 1971 for a paltry $35. That paycheck would be worth
approximately $200 in today’s dollars It was designed by a graphic design
student named Carolyn Davidson who attended Portland State University.
Initially, Phil Knight (Nike founder) was not emphatic about the design, but
guessed that it would grow on him with time.
Knight eventually realized the value that the logo helped
create and in 1983 he gave Davidson a golden swoosh ring with an embedded
diamond. He also presented her with an envelope with an undisclosed amount of
NKE stock in an effort to repay her for her efforts on what was now a
world-famous logo.
Revenues from “Men’s Training” are more than double that
of “Women’s Training”
Apparently, Nike resonates much better with the male
population than it does with females. On its most recent 10-K report, the
company had two line items titled “Men’s training” and “Women’s training.” As a
percentage of Nike Brand wholesale equivalent revenues, Men’s Training accounts
for 11.4% while Women’s Training accounts for just 5.1% [see also Dividends in
Focus: The Dow 30].
Nike 2014 Revenues (In Millions)
Nike 2014 Revenues
Men's Training
Women's Training
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
Highcharts.com
Nike Owns Converse and Hurley International
Converse is perhaps most famous for its Chuck Taylor shoes,
which have been around since 1917. But what many investors may not know or
remember is that Nike acquired the company in 2003 for just over $300 million.
See more facts about Nike shoes here. This was after Converse fell on hard
times and was forced to file for bankruptcy. Hurley International is another popular
brand that focuses on the surfing and skateboarding community. The company was
acquired by Nike in 2002 for an undisclosed amount, though it has been able to
maintain a relatively strong separation from its parent company over the years.
Nearly 15% of Revenues Come from Emerging Markets
By now, most investors are familiar with the explosive
growth that many emerging markets are enjoying. Along with economic expansion
comes a powerful and ever-growing consumer class. Nike has been able to take
advantage of this demographic shift, and now derives nearly 15% of its revenues
from the emerging world. Here is a breakdown of Nike’s revenues by region:
Nike Sales Breakdown by Region
North America
Western Europe
Central & Eastern Europe
Greater China
Japan
Emerging Markets
2014 Revenues (MM)
$0
$2,500
$5,000
$7,500
$10,000
$12,500
$15,000
Highcharts.com
No Single Customer Accounted for more than 10% of 2014
Net Sales
The company made it a point to mention this fact in its
10-K. The reason this is significant is because it means that no one customer
is the driving force behind Nike’s business, and it is not overly reliant on a
particular account. While a large account can help bolster a company, it can
spell trouble when that account disappears and evaporates revenues with it.
Nike has done a good job of diversifying its sales to ensure that its income
stream is derived from a wide variety of customers.
The Bottom Line
As we have stated before, learning interesting
facts about a particular company may not always have a direct impact on your
investment, but they can help illustrate an important lesson. Always look under
the hood of what you are investing in, and be sure that you know how a security
or company functions
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