Favorable Industry Trends: Among these are the growing popularity of running worldwide and the increased desire for minimalist footwear. A heightened emphasis on fashion in the athletic realm is also giving NIKE a boost, since style has always played a large role in its footwear and apparel lines. The company’s fashion focus explains, we think, why NIKE gear is universally worn casually rather than merely during sporting pursuits.
Direct to Consumer: eCommerce, in particular, represents a big opportunity for NIKE, and we expect this to be a $2 billion business annually within a few years, versus closer to $540 million today. That said, the company should continue to expand its base of retail shops and factory stores, as these locations allow NIKE to best control its brand, more effectively manage its inventory, and win new wholesale accounts. At present, there are over 750 retail units worldwide, including over 300 in the United States.
Emerging Market Growth: Conditions in China are a bit challenging these days, as that country experiences a moderate economic slowdown. But China, with its huge population and emerging middle class, still represents an excellent long-range opportunity for the company. What’s more, advances in other thriving BRIC nations, most notably Brazil (where the passion for sports is high and getting higher ahead of the World Cup soccer tournament), should easily pick up any slack in the coming quarters.