ANALYSIS: More of the same in Nike growth targets
Nike is targeting US$27bn revenue by 2015
Nike’s long-term growth plans constitute, to paraphrase the words of one rather underwhelmed analyst, more of an evolution than a revolution. The headline revenue target of US$27bn looks impressively bullish, but much of what lies behind it is little more than a development of past strategies.
In particular, two of the growth opportunities picked out of the plans unveiled at the company’s New York investor meeting are not quite as significant as their billing would have us believe.
Like many other companies, Nike is attracted by the growth prospects of its own branded retail operation, but the sportswear giant isn’t exactly jumping in with both feet. A target of 250-300 new stores in five years for a company of this size and reach is a surprisingly modest goal.
Instead, it’s clear that Nike’s focus is much more on continuing to support retail partners, which will receive a decent share of the company’s planned $500-600m capital spending over the next five years. Wholesale revenues will still account for roughly 80% of Nike’s business by 2015, the company reckons.
Then there are the subsidiary brands – businesses like Cole Haan, Converse, Nike Golf and Umbro. With Nike’s core branded business increasingly mature in a rising number of markets, you would expect these to have to shoulder more than their fair share of future growth.
Indeed, Nike expects them to bring in up to $2bn in additional revenue by 2015, capitalising on their relatively immature positions in the global marketplace.
But don’t be fooled – that’s still small in comparison to the share of the business enjoyed by the mother brand, whose current 85% slice of total revenues will only slowly be eroded.
The growth prospects are somewhat more clear-cut in some of the Nike brand’s business areas – action sports and football being the most obvious examples – and clearer still in terms of geography.
Relative maturity in traditional markets means that Nike is targeting only mid-single digit revenue growth in North America, Western Europe and Japan, while emerging markets including Greater China, as well as central and eastern Europe, are expected to add up to $3.5bn in annual revenue by 2015.
Proof positive that while the West is still crucial to Nike’s business over the next five years, reaching that bullish $27m revenue target will depend squarely on what the company achieves in the East.
Click here for more details on Nike's 2015 global growth strategy.
Details on sales growth for the world's top 215 clothing manufacturers, internet retailing, sales of organic cotton, and Europe's top 10 supplier countries help set the scene for likely changes in the...
Sporting goods giant Nike has named Carl Grebert as the company's new vice president and general manager of Nike Japan, replacing Jim Godbout....
The founder of sporting goods firm Nike and his wife have given a multimillion-dollar gift to a local school. ...
Magnus Claesson has been appointed as VP China of New Wave Group, which designs, acquires and develops brands including Umbro and Cutter & Buck. ...
Apparel maker Guess Inc has hired former Nike executive J Michael Prince as its chief operating officer, responsible for overseeing the company's operational support and global supply chain functions....
- PSF 2014: No one size fits all in apparel sourcing
- PSF 2014: Shifting focus from cost to consumer
- Garment manufacturers eye Myanmar outsourcing
- Bangladesh industry development moving backwards
- Teen retail being rocked by fast fashion headwinds
- Adidas China supplier in discussions over strike
- Gap issues mirror widespread industry challenges
- Bangladesh PM asks clothing buyers to pay more
- H&M "pushing the process" on sustainable fashion
- Adidas plans mobile phone hotline at all suppliers
- Ethiopia – the emerging textile and clothing industry
- Antimicrobial fibres, fabrics and apparel: innovative weapons against infection
- Trade and trade policy: clothing imports, consumer expenditure and trends in five emerging markets: Brazil, Colombia, India, Kazakhstan and Peru, 4th quarter 2013
- Sustainable Textiles for Apparel: Fact, Fiction and Future Prospects
- Jeans in Italy