Nike Analysis

Company Evaluation Project

Of

Nike Corporation

Submitted By:

Steven Ritter

May 10, 2007

Financial Analysis

Description of Company

History

Nike Corporation has become one of the most competitive sports and fitness companies worldwide. Two runners, Bill Bowerman and Phil Knight, from a small town in Oregon embarked upon the business with a handshake agreement. The enterprise began in January of 1964 with the introduction of Blue Ribbon Sports. In 1966 the handshake between Bowerman and Knight was made official with a formal written partnership. While the company was still young there were others who were imperative participants in the growth of the corporation. Jeff Johnson became Blue Ribbon Sports’ first full time employee in 1965. Johnson sold shoes out of the back of his van at high school track meets.

Johnson also opened the first retail store in California and is credited with providing Nike with its name. In 1971 the swoosh trademark was created for a minimal fee of only thirty five dollars by a graphic design student named Carolyn Davidson. By 1972, new athletic footwear was introduced by Blue Ribbon Sports and called Nike. The Blue Ribbon Sports Company had business relations with Onitsuka Tiger for nearly ten years and in 1972 the two hit a bump in the road. Due to a dispute over distribution there was an eventual sever in business dealings between the two companies. That same year the Nike line of footwear made its debut in February at a Chicago sporting goods show. At the 1972 Olympic trials Nike “moon shoes” were introduced featuring the new waffle sole. Along with these new shoes, t-shirts were also being worn bearing the Nike logo. This new brand began to spark an interest. Later that year, Nike signed its first endorsement contract with the Romanian tennis star, Ilie Nastase.

After a tremendous year in 1972, Steve Prefontaine was the first major track athlete to wear Nike. He converted various other athletes to the new brand and helped to provide a competitive feel toward the image of Nike. In 1974, the innovative waffle trainer was introduced and rapidly grew to be the best-selling training shoe in the country. When the Olympic trials arrived in 1976 the promising future of Nike was realized when numerous young and rising stars were seen sporting the Nike shoes. By 1977 Blue Ribbon Sports began branching out by creating the first track and field club for elite athletes. The organization was called Athletics West.

On May 30, 1978, Blue Ribbon Sports officially changed its name to Nike, Inc. In the following year an addition to the Nike family occurred when tennis star John McEnroe signed a deal with the company. Not long after this addition Nike proved to be innovative with the development of air cushions. Air cushions were used in footwear, specifically, the Tail Wind shoes. This was the first running shoe to utilize the air-sole cushioning system. At the 1980 Olympic Games in Moscow, Nike shoes took their first stand on the podium with the help of British running medalist, Steve Ovett.

In the early 1980’s Nike begins to provide basketball shoes and apparel. By 1985 the first Air Jordan’s hit the stores. In 1986 revenues topped the landmark billion dollar mark and began to supply apparel collections for both tennis and basketball. As the end of the 1980’s approach Nike begins it’s add campaign “Just do it.” This phrase becomes one of the top taglines of the twentieth century and makes its mark upon American history. When 1988 begins, Nike takes on a new line, Cole Haan. This is a more luxurious line encompassing footwear, accessories and outerwear.

Throughout the 1990’s Nike continues to grow and prosper. Nike gains more endorsers and is prevalent among track and field events in the Olympic Games. Nike continues to expand as it takes upon the Brazilian national football team. It also enters into the realm of hockey with the acquisition of Bauer. Later in the 1990’s Nike also embraces the golf world with Tiger Woods signing an endorsement contract for apparel and footwear. At the turn of the century Nike opens a state of the art European headquarters in the Netherlands. In the Sydney Olympic Games Nike also is the sponsor for the entire Australian Olympic team.

At the beginning of 2000, Nike introduces a new product for the next generation of runners, they are called Nike Shox. Subsequent to the events of September 11, 265 employee runners participated in a run across America. They stop at forty-four firehouses from Oregon to New York. In 2002, Nike obtains Hurley International which is a surfing, skating and snowboarding apparel line. Later that year NikeGo is implemented to help increase physical activity across America. As 2003 approaches Nike is named “Advertiser of the Year” by the Cannes Advertising Festival for the second time. That same year Nike’s international sales surpassed their U.S. sales for the first time ever. In the following year Nike acquires the Converse Corporation and also embraces the LIVE STRONG phenomenon and raises millions of dollars for young people with cancer. By 2006, Nike begins to contact the world of technology by partnering up with Apple to launch a new running shoe that is connected to music through a small sensor.

Number of Employees

The Nike Corporation has branched out worldwide. Nike can be found in Europe, Middle East, and Africa (EMEA) region, the Asia Pacific region, and also the Americas region (North and South America excluding the United States). The home of Nike is primarily in the Pacific Northwest of the United States. Nike employs approximately 25,000 people worldwide and 650,000 people are employed in Nike contracted factories globally. Nike also has six subsidiaries: Cole Haan Holdings, Inc., NIKE Bauer Hockey, Hurley International LCC, Nike IHM, Inc., Converse Inc., and Exeter Brands Group LCC.

Future Outlook

Nike continues to lead innovation in footwear, apparel, and equipment. The future of Nike is promising because of their extensive research and development laboratories. Nike is constantly producing the next new