Nike expects to double its womens business to $11bn by 2020

Nike expects to double its women's business to $11bn by 2020

Sporting goods giant Nike has said it expects revenues to reach US$50bn by 2020, with its women's business set to double over the same period. 

The growth targets, unveiled at its investor day yesterday (14 October), reflect high single-digit to low double-digit growth, a mid-teens earnings per share gain, 30-50 basis points of gross margin expansion and slight SG&A leverage. 

As part of this, the group expects its women's business to reach $11bn in revenue by 2020 – up from $5.7bn this year. Its running category is forecast to grow to $7.5bn, and the Jordan brand, which will be reported separately from the basketball category going forward, is set to nearly double in size to $4.5bn. 

“Nike is built for growth,” said president and CEO Mark Parker. “We see tremendous growth potential in our key categories and geographies, as we connect with athletes through personal service, inspirational experiences and innovative product. When we look across our entire business, there has never been more opportunity.”  

In addition, Nike expects brand direct to consumer (DTC) operations to reach $16bn during the period, driven by its e-commerce sales, which are projected to increase to $7bn. The company also expects to drive wholesale growth in the mid-to-high single-digit range. 

In terms of geographic opportunities, the sporting goods group expects its more developed regions (North America, Western Europe and Japan) to generate a high single-digit gain over the next five years, with revenue in North America set to reach $20bn. 

For its developing geographies (emerging markets, Greater China, and central and eastern Europe), Nike forecasts low double-digit growth, with emerging markets to increase low double-digit, and Greater China to rise at a mid-teens growth rate, totalling $6.5bn in revenue by 2020. 

Cowen and Co analyst John Kernan said the targets reaffirmed his view that the company can accelerate top line momentum and remains a dominant brand with substantial pricing power. 

“We are raising our estimates to reflect these new targets, with our FY17 EPS increasing to $4.88 from $4.82, in line with consensus,” he said.

The targets were revealed as Nike separately said it is accelerating its 'manufacturing revolution' by partnering with a sketch-to-scale business to develop innovative footwear that can reach consumers more quickly, while offering customisation and increased performance. Click on the following link to read more: Nike to accelerate product and manufacturing innovation.