NIKE, Inc.By

Joe Ivey

Nike is without a doubt one of the world’s top sports and fitness companies, and has a legacy which dates back to 1962 when they first arrived on the scene under the

name of Blue Ribbon Sports. Today Nike is known for their top of the line sports

apparel and athletic shoes.

In the year 1962, Philip H. Knight reached out to an athletic shoe company in Japan called the Onitsuka Tiger Co., because he strongly believed in the quality in the running shoes that were manufactured there.

Knight set up a plan to gradually introduce some of the Onitsuka Tiger Company’s products to the United States.

In that same year Knight founded Blue Ribbon Sports (BRS), which pleased his Japanese counterparts.

In 1963 BRS finally set the plan in motion by taking delivery of the Onitsuka Tiger Company’s athletic shoes (200 pairs), and pushed to sell them at a lot of different track meets.

Continued…

History of NIKE, Inc.

Knight was laboring by himself until the next year in 1964, when William Bowerman, Knight’s old track coach, matched his investment with $500 and became his partner.

In 1966, the two partners open up the company’s first retail outlet, after generating $20,000 in sales the previous year.

William Bowerman’s unique designs became a huge seller in 1967 as their business spread from California to the East Coast, setting up distribution headquarters in Massachusetts.

The following year in 1968, the company becomes incorporated when they designed the Cortez shoe, which brought about much progress with bringing about the first running shoe to have a cushioned mid-sole from the heel to the toe.

Continued…

In 1971 BRS expands its operations overseas, as they began to manufacture products through financing from the Nissho Iwai Corporation, and independent contractors.

In the same year BRS brought to the scene a product line called Nike, which had a Swoosh logo representing Greek mythology’s victory goddess. This was the first recorded line of Nike’s that were sold.

In 1972 the partnership between BRS and Onitsuka Tiger came to an end through failure to come to an agreement over distribution, and BRS began to push the Nike brand through the Olympic Trials in that same year.

In 1978 Blue Ribbon Sports changed its name to Nike, Inc., and the following year introduced the Nike Air shoe along with a new clothing line.

Continued…

In 1980 Nike goes public.

In 1981 Nike begins to focus on promoting their products over seas in markets all across Europe, Asia, Japan, Africa, and Latin America.

In 1985 Nike furthered the success of the company by having Michael Jordan to sign a contract to endorse one of it’s versions of the Nike Air shoe and called this one the “Air Jordan.”

In 1988 the very popular slogan “Just Do It” was introduced to the world.

Continued…

In 1988 Cole Haan, maker of casual and dress shoes, is acquired.

In 1990 Nike, Inc. opened up NikeTown retail outlets which began in Portland Oregon.

In 1994 Nike, Inc. acquires Canstar Sports Inc., the leading maker of skates and hockey equipment in the world, later renamed Bauer Nike Hockey Inc.

In 1993 Sporting News dubbed Philip H. Knight the most powerful man in sports.

Financial Performance&

Direct Competitor Comparison

NIKE Addidas PVT1 PVT2 Industry

Market Cap:

37.32B 11.75B N/A N/A 263.39M

Qtrly. Rev.Growth

7.70% 18.70% N/A N/A 5.00%

Revenue 19.01B 14.21B 1.64B 3.53B 272.87M

GrossMargin

46.28% 47.27% N/A N/A 40.44%

OperatingMargin

13.01% 7.84% N/A N/A 1.01%

Net Income 1.91B 684.65M N/A 180.40M N/A

EPS 3.86 1.61 N/A N/A 0.85

NIKE, Inc.’s Recent Success

According to the results of the fourth quarter, Nike Inc.’s profit jumped 53%, and is expected to continue doing well as future orders pour in. Nike, Inc.’s marketing campaign of the World Cup and the sponsorship of 10 teams were the catalyst in forecasting a spike in sales. For the month ending May 31, 2010 Nike, Inc. reported a profit of $521.9 million which was greater than last year’s $341.4 million, and a share of $1.06 a share which is more than the previous year’s 70 cents a share.

According to Morgan Stanley “transaction data suggest Nike’s U.S. apparel sales jumped 13.5% during the quarter.” There was reason to believe that the jump in sales of apparel in the U.S. was because of the events that took place during that quarter, which was the World Cup. The World Cup sparked the demand of jerseys and other related apparel surrounding the World Cup. There are many competitors worldwide in the athletic apparel market and Nike controls 10%, and 35% of its share is in athletic shoes.

Critical Issues

There has been a campaign spearheaded by college students in universities to burden Nike by forcing them to take action surrounding the 1,800 workers who lost their jobs in Honduras because their factories were closed by a couple of subcontractors. The campaign led to Nike having to pay out $1.54 million to resolve the issue with the 1,800 workers.

A nationwide group by the name of United Students against Sweatshops along with students in universities forced Nike to pay $2 million in severance, which was something the subcontractors neglected to do. The $1.54 million had nothing to do with the $2 million in severance; it was for a worker relief fund. That’s a total of $3.54 million, and that is not including the finance health coverage and training that Nike agreed to provide the workers who lost their jobs.

NIKE, Inc. Still Kicking

Despite all of the controversy Nike had faced with college students in several universities, it did not stop Nike from introducing the new uniforms for 10 college football teams. Nike brings their innovative designs to the following teams:

Ohio State Alabama Florida Boise State Miami Oregon State Pittsburgh TCU Virginia Tech West Virginia

These 10 college football team uniforms are said to be 37% lighter.

Analysis

If Nike continue in their legacy of making athletic shoes and apparel with the

innovative designs that we have all been accustomed to seeing, along with excellent

marketing, then there shouldn’t be a problem remaining the number one sports

and fitness company in the world.

Recommendations &

Projections

If I had to give any recommendations, I would tell the people at Nike, Inc. to continue doing what they are doing as far as coming up with new designs, quality sports apparel and footwear, getting the right players to endorse them, and run the same marketing campaign until it has run its course, then switch it up.

I predict that Nike will maintain impressive numbers in sales, quarterly growth, and net income through these rough economic times, and will do even better as the economy slowly recovers.

References

NIKE, Inc. (2010, September 18). Nike, inc. Retrieved from http://www.fundinguniverse.com/company-histories/NIKE-Inc-Company-History.html

Yahoo Finance. (2010, September 18). Nke competitors/nike, inc. common stock stock- yahoo! finance.Retrieved fromhttp://finance.yahoo.com/q/co?s=NKE

Kell, J. (2010). Corporate news: nike's quarterly profit jumps 53%. Wall Street Journal. (Eastern edition). New York, N.Y.: Jun 24, 2010. pg. B.4, 411(00999660), Retrieved from http://proquest.umi.com/pqdweb?did=2065199041&sid=1&Fmt=3&clientId=18417&RQT=309&VName=PQD doi: 2065199041

Lahart, Evans, J., K. (2010). Ahead of the tape. Wall Street Journal. (Eastern edition). New York, N.Y.: Jun 23, 2010. pg. C.1, 379(00999660), Retrieved from http://proquest.umi.com/pqdweb?did=2064598751&sid=2&Fmt=4&clientId=18417&RQT=309&VName=PQD doi: 2064598751

References Continued

Greenhouse, S. (2010). Pressured, nike to help workers in honduras; [business/financial desk]. New York Times. (Late Edition (East Coast)). New York, N.Y.: Jul 27, 2010. pg. B.1, 886(03624331), Retrieved from http://proquest.umi.com/pqdweb?did=2092082941&sid=3&Fmt=3&clientId=18417&RQT=309&VName=PQD doi: 2092082941

McCarthy, M. (2010). Nike schools will be outfitted for tradition. USA TODAY. McLean, Va.: Sep 1, 2010. pg. C.3, 253(07347456), Retrieved from http://proquest.umi.com/pqdweb?did=2126752681&sid=4&Fmt=3&clientId=18417&RQT=309&VName=PQD doi: 2126752681

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