Nike

Fashion Retail & Mall Management

By

Divya Manivannan

MFM/14/301

Masters In Fashion Management

Sl No. Contents Page No.

1 Corporate History

2 - Timeline

3 - Logo Transformation

4 Organizational Structure

5 Annual Report

6 Target Customer

7 Retail Mix

8 - Retail Format

9 - Merchandise Mix

10 - Store Environment

11 - Pricing Strategy

12 - Promotional Strategy

13

Index

Nike, Inc. is an American multinational corporation that is engaged in the design,

development, manufacturing and worldwide marketing and sales of footwear, apparel,

equipment, accessories and services. The company is headquartered near Beaverton,

Oregon, in the Portland metropolitan area. It is one of the world's largest suppliers of

athletic shoes and apparel and a major manufacturer of sports equipment. As of 2012, it

employed more than 44,000 people worldwide. In 2014 the brand alone was valued at

$19 billion, making it the most valuable brand among sports businesses.

Begin in 1964 as Blue Ribbon Sports Renamed Nike in 1978,after the Greek goddess of

victory Key people of Nike : Bill Bowerman & Phil Knight Headquarters in Beaverton,

Oregon , USA World’s most competitive sports and fitness company Nike employees

over 26,000 people

Corporate History

Current CEO : Mark Parker

Annual revenue (2008): more than $18billion

Founders: Bill Bowerman, Philip Knight

Year established: 1964 (as Blue Ribbon Sports)

Industry: Sportswear/equipment

HQ: Beaverton, Oregon

President/CEO: Mark Parker

Staff: 30,200

Products: shoes, apparel and sports equipment, accessories

Slogan: Just Do It!

1970- The Swoosh first appears on a football/soccer cleat called the Nike.

1978- Tennis "bad boy" John McEnroe is signed by Nike to an endorsement contract.

1989- Nike enters the European football market

1994 +2003- Nike wins Advertiser of the Year at the Cannes Advertising Festival.

1996- Nike signs Tiger Woods

1999- Bill Bowerman, co-founder of Nike, dies on Dec. 24 at age 88.

2002- Nike purchases Hurley International

2003- Nike acquires once-bankrupt rival Converse for $305 million

2004- Phil Knight steps down as CEO and President of Nike, but continues as chairman

Time Line

2005- Nike Signs Tennis Pro Rafael Nadal.

2006- Nike and Apple release the Nike+iPod sports kit

2008- Nike sells its Nike Bauer hockey equipment division & purchases Umbro

Logo Transformation

Organizational Structure

NIKE, Inc.

CONSOLIDATED STATEMENTS OF INCOME

For the period ended May 31, 2013

THREE MONTHS ENDED % TWELVE MONTHS ENDED %

(Dollars in millions,

except per share

data)

5/31/20

13

5/31/20

12 Change

5/31/20

13

5/31/20

12

Chan

ge

Income from

continuing

operations:

Revenues $ 6,697 $ 6,236 7 % $ 25,313 $ 23,331 8 %

Cost of sales 3,757 3,567 5 % 14,279 13,183 8 %

Gross profit 2,940 2,669 10 % 11,034 10,148 9 %

Gross magrin 43.9 % 42.8 % 43.6 % 43.5 %

Demand creation

expense 642 735

-

13 % 2,745 2,607 5 %

Operating overhead

expense 1,380 1,161 19 % 5,035 4,458

1

3 %

Total selling and

administrative

expense

2,022 1,896 7 % 7,780 7,065 1

0 %

% of revenue 30.2 % 30.4 % 30.7 % 30.3 %

Interest expense

(income), net 3 1 - (3 ) 4 -

Other expense

(income), net 13 37

-

65 % (15 ) 54 -

Income before

income taxes 902 735 23 % 3,272 3,025 8 %

Income taxes 206 176 17 % 808 756 7 %

Effective tax rate 22.8 % 23.9 % 24.7 % 25.0 %

NET INCOME

FROM

CONTINUING

OPERATIONS

696 559 25 % 2,464 2,269 9 %

Annual Report

NET (LOSS)

INCOME FROM

DISCONTINUED

OPERATIONS

(28 ) (10 ) - 21 (46 ) -

NET INCOME $ 668 $ 549 22 % $ 2,485 $ 2,223 1

2 %

Earnings per share

from continuing

operations:

Basic earnings per

common share $ 0.78 $ 0.61 28 % $ 2.75 $ 2.47

1

1 %

Diluted earnings per

common share $ 0.76 $ 0.60 27 % $ 2.69 $ 2.42

1

1 %

Earnings per share

from discontinued

operations:

Basic earnings per

common share $ (0.03 ) $ (0.01 ) - $ 0.02 $ (0.05 ) -

Diluted earnings per

common share $ (0.03 ) $ (0.01 ) - $ 0.02 $ (0.05 ) -

Weighted Average

Common Shares

Outstanding:

Basic 892.6 916.3 897.3 920.0

Diluted 913.4 936.3 916.4 939.6

Dividends declared

per common share $ 0.21 $ 0.18 $ 0.81 $ 0.70

NIKE, Inc.

CONSOLIDATED BALANCE SHEETS

As of May 31, 2013

May 31, May 31,

(Dollars in millions) 2013 2012 % Change

ASSETS

Current assets:

Cash and equivalents $ 3,337 $ 2,317 44 %

Short-term investments 2,628 1,440 83 %

Accounts receivable, net 3,117 3,132 0 %

Inventories 3,434 3,222 7 %

Deferred income taxes 308 262 18 %

Prepaid expenses and other current assets 802 857 -6 %

Assets of discontinued operations - 615 -100 %

Total current assets 13,626 11,845 15 %

Property, plant and equipment 5,500 5,057 9 %

Less accumulated depreciation 3,048 2,848 7 %

Property, plant and equipment, net 2,452 2,209 11 %

Identifiable intangible assets, net 382 370 3 %

Goodwill 131 131 0 %

Deferred income taxes and other assets 993 910 9 %

TOTAL ASSETS $ 17,584 $ 15,465 14 %

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Current portion of long-term debt $ 57 $ 49 16 %

Notes payable 121 108 12 %

Accounts payable 1,646 1,549 6 %

Accrued liabilities 1,986 1,941 2 %

Income taxes payable 98 65 51 %

Liabilities of discontinued operations 18 170 -89 %

Total current liabilities 3,926 3,882 1 %

Long-term debt 1,210 228 431 %

Deferred income taxes and other liabilities 1,292 974 33 %

Redeemable preferred stock - - -

Shareholders' equity 11,156 10,381 7 %

TOTAL LIABILITIES AND SHAREHOLDERS'

EQUITY $ 17,584 $ 15,465 14 %

Nike’s customers includes a variety of people from different ages and genders of

upper middle class and affluent audience.

Target Customers

Retail Formats

The company targets active people and their customers wear the fashionable

shoes for sports, leisure, and other activities.

Nike's segmenting market typically target's athletes, both women and male

generally from the ages 15 to 35.

Nike's targeting market is people who enjoy high quality sporting goods,

especially footwear. To do so Nike focuses on creating premium consumer

experiences on product innovation, brand leadership and elevated retail presence.

Nike is further targeting geographic expansion and farther marketing penetration

in all regions. Though disciplined operating management, the company still

continues to target long range mid teen earnings per share growth.

Nike has a strong network of retailers in 200 countries worldwide through distributors,

licensing and subsidiaries. Within the USA there are 18000 stores that retail nike

products.

Store Location

Nike has a strong network of retailers in 200 countries worldwide through distributors,

licensing and subsidiaries. Within the USA there are 18000 stores that retail Nike

products.

The company sells its products to retail accounts, through its owned retail stores, and

through a mix of independent distributors and licensees, as well as through Internet Web

site ‘nikestore.com’.

NIKE inc. has major four subsidiaries which are: Converse, Cole Haan Holdings, Nike

Bauer Hockey, Hurley International.

Nike Towns - Best stores, the UK’s flagship Nike store is the only place in the

country to see the omnipresent sports brand’s full range all together. Nike towns

are well established flagship stores in every country. a 3-storey high, 360°

projector screen – which springs to life every 20 minutes; as window blinds are

snapped shut, customers are barraged with a menagerie of sporting images. With

70,000 square foot of shopping space they manage to fit everything in, and more

besides. The store boasts the largest women’s sports clothing and footwear area

in Europe.

Retail Formats

Retail Mix

Nike Concept Stores – Better stores, the shop is a concept ‘town’. Buildings, each

housing a specific sport, surround a central square, the store’s focal point. It’s

more than just a shop; each week they put on special events, athletes come in for

interviews, they even organize a running club.

Nike Shop-in-Shops – Good stores, store in stores with fine products.

Nike Factory Outlet – Value store, stock clearance with a relatively lower price.

Nike Customization – Single audience customization center, where Nike product

are customized as per the customer requirement.

Nike Online Store – Value stores, It’s the only place where product clearance

sale upto 60% is announced.

In Greek Mythology, the word “Nike” is associated to the goddess of success, representing ‘honored

conquest’ on the battleground. When Bill Bowerman and Phile Knight founded Nike, they aspired to

inspire this myth in every product. Primarily, Nike focused on top quality sports shoes but then branched

out quickly to all kinds of sportswear. Their objective was not just to aid the world’s finest sportsmen find

new degree of accomplishment, but to morph the normal person into a new place of Nike athleticism. The

founder wanted each client to believe that through purchasing Nike products, they would obtain success,

power and happiness. Nike stores are consistent with this dream. As a money making business, the

branding strategy of Nike is to persuade its client into buying merchandise.

Footwear Studs For Striker

Mid Fielders

Defenders

Apparel Headwear

Tops

Polos

Shorts

Merchandise Mix

Socks

Jersey

Jackets

Equipment Ball

Bag

Watches

National Team Gear Jersey for Brazil, England etc.

Club Gear Club Jersey like Man U

Real Madrid etc

As a money making business, the branding strategy of Nike is to persuade its client into

buying merchandise. The style of the Nike Stores uses standard in-store methods so as to

improve the chance of customer’s purchases. While walking into the Nike store, the most

enticing element is the highly made and symmetrical layout. Every sport is provided its part

that is arranged in color and product type. It is done to appear like there are small stores in

one bigger store. In flagship store for instance, has aqua or water walls the same to that

what would see as a real swimming pool. This branding strategy of Nike makes it easier for

people to find the product they needed. This branding strategy of Nike served two reasons:

1. Through having diverse parts for every sport, Nike produced extra markets for every

client. It facilitated the belief of every customer which they want apparel for each sport they

were participating in. It also made clients disregard that Nike sporting shirts act similar

Store Environment

objective as the yoga shirts. The objective is to make markets in one.

2. To disembodies the prospective client from the store. Through developing a swimming

portion really looks like a swimming pool, company facilitates spending through making

space which appeals to the thoughts. This branding strategy of Nike is also related to the

basis Nike wanted their floors, walls as well as ceilings to be unsuspecting and dark. They

want the target to be on the décor and product that takes the client away the place or store

and into a fantasy, mythological realm.

Nike’s pricing is designed to be competitive to the other fashion Shoe retailer. The pricing is

based on the basis of premium segment as target customers. Nike as a brand commands high

premiums. Nike’s pricing strategy makes use of vertical integration in pricing wherein they

own participants at differing channel levels or take part in more than one channel level

operations. This can control costs and influence product pricing.

The Nike Company has applied a number of pricing strategies. First of all, it used

penetration/ introductory strategies when entering the market. However, after establishing

itself in the industry, the company has adopted a premium pricing strategy. The premium

Pricing Strategy

strategy is application of a fixed price based on the quality of the product. Some critics have

claimed that Nike prices are rather high. However, experts claim that prices should reflect

quality of the product. This strategy seems to be working because most clients who choose to

purchase Nike products assert that they are ready for their prices since they feel that Nike is

justified.

Promotion is largely dependent on finding accessible store locations. It also avails of

targeted advertising in the newspaper and creating strategic alliances. Nike has a number of

famous athletes that serve as brand ambassadors such as the Brazilian Soccer Team

(especially Ronaldo, Renaldo, and Roberto Carlos), Lebron James and Jermane O’Neal for

basketball, Lance Armstrong for cycling, and Tiger Woods for Golf.

Retail Promotion

Nike also sponsors events such as Hoop It Up and The Golden West Invitational. Nike’s

brand images, the Nike name and the trademark swoosh; make it one of the most

recognizable brands in the world. Nike’s brand power is one reason for its high revenues.

Nike’s quality products, loyal customer base and its great marketing techniques all

contribute to make the shoe empire a huge success.

Indian soccer team captain Baichung Bhutia is the new brand ambassador of Nike.