FY18/19 Strategic Investment Report Alexis Newkirk Angele Cherbonnier Anteneh Lisan Brogan Brasseaux Emily Fisher

ANike Women: Casey. Introduction External Assessment Internal Assessment Financial Analysis Final Recommendation Appendix

INTRODUCTION

3 Executive Summary EXTERNAL ASSESSMENT

5 Porter’s Five Forces 6 Opportunities and Threats 7 Macro Forces 8 Key Success Factors 10 Bounce Back Factor INTERNAL ASSESSMENT

13 Competitive Advantages 15 The New Retail 16 Strengths and Weaknesses FINANCIAL ANALYSIS

18 Revenue 20 Income Statement 22 Balance Sheet FINAL RECOMMENDATION

26 Why You Should Invest APPENDIX

28 Porter’s Five Forces Cont. 29 Macro Forces Cont. 31 Works Cited 33 Photography Credits

FY18/19 Strategic Investment Report 1 Introduction External Assessment Internal Assessment Financial Analysis Final Recommendation Appendix

INTRODUCTION

BRed Sweats. FY18/19 Strategic Investment Report 2 Introduction External Assessment Internal Assessment Financial Analysis Final Recommendation Appendix

EXECUTIVE SUMMARY

NIKE, INC. DESIGNS, DEVELOPS, COMPANY PORTFOLIO MARKETS AND SELLS ATHLETIC FOOTWEAR, APPAREL, EQUIPMENT, NIKE, Inc. portfolio brands include the NIKE brand, Jordan Brand, Hurley, ACCESSORIES AND SERVICES and , each with a powerful WORLDWIDE. connection to consumers.iii

Since its establishment in 1964, Nike has grown from its start as Blue Ribbon Sports into the market leader for NIKE Brand is focused on performance global athletic wear and equipment.i athletic footwear, apparel, equipment, Rising to the top doesn’t come without accessories and services across a wide challenges or criticisms, and Nike has range of sport categories, amplified persisted using strong public relations with sport-inspired sportswear products and research and development teams carrying the trademark, as well to develop it into a performance and as other NIKE Brand trademarks.iii pop culture trend maker. A culture of innovation has been prevalent from its start, when founder and former University of Portland track coach, , borrowed his family’s waffle iron one morning to create the prototype for what is now the famous Nike Waffle Jordan Brand designs, distributes, and Outsole, which can be found on shoes licenses athletic and casual footwear, like the Nike One and Air Max. apparel, and accessories perdominantly ii Throughout this report, we will explore focused on basketball, using the the internal environment, external trademark.iii environment and financial health of Nike, as well as how their roots have guided them into the global phenomenon they are today. These guiding factors Hurley will paint a vivid picture of why Nike designs and distributes a line of is in a good position to enhance their action sports and youth lifestyle apparel and accessories under the Hurley shareholder’s wealth and why they are a iii good investment. trademark.

Converse designs, distributes, and licenses casual , apparel, and accessories under the Converse, Chuck Taylor, All Star, One Star, Star Chevron, and Jack Purcell trademarks.iii

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EXTERNAL ASSESSMENT

CNike Women: Gilda. FY18/19 Strategic Investment Report 4 Introduction External Assessment Internal Assessment Financial Analysis Final Recommendation Appendix

PORTER’S FIVE FORCES

For Nike to have achieved their unmatched success throughout the years, it requires an understanding of the dominant industry they compete in, which is the athletic footwear industry. This can be done by an analysis of the Porter’s Five Forces, where a complete summary can be found in the appendix. Two of the Porter’s Five Forces are key to understanding how Nike and other players in the industry operate. THREAT OF COMPETITIVE RIVALRY

The threat of competitive rivalry is the strongest of the five forces.iv The biggest players in the industry include Nike, Adidas, ASICS, and Puma, and all of these companies compete in product development and related diversification to provide new options for consumers, customer service and quality, and aggressive sports marketing through advertising campaigns and v endorsements. The small number of entrants may not have the resources to in more personal ways through new large players leads to the taking of invest on a similarly large-scale. initiatives, but they also utilize their market share from one another, and can Economies of scale also serve as own retail stores as well as third-party lead to process being driven down to a barrier to entry as these existing retailers, such as Foot Locker and Dick’s maintain a more competitive edge. companies produce on a larger scale Sporting Goods.vii They also have been to reduce their costs per item. They are able to sponsor individual athletes, THREAT OF NEW ENTRANTS dedicated to newer technology for R&D, as well as collegiate and professional and access to various suppliers help athletic teams. For instance, both Nike The threat of new entrants is one of the them achieve this. Newer entrants may and Reebok (owned by Adidas) have weakest forces due to the high barriers not have the resources to produce on been official NFL uniform sponsors, and to entry. The brands in this industry this scale, and if they do, they may not able to sell official licensed NFL apparel. are highly differentiated amongst one have the customer base to purchase viii This robust analysis of the industry another and therefore have significant the products.v On the demand-side of helps Nike to navigate their role as a brand recognition. The existing economies of scale, consumers in the global leader in the industry. companies have managed to make athletic footwear industry seek to be customers perceive their products as a part of a larger community so as to unique, which has, in turn, increased stay connected with other patrons and customer loyalty and switching costs. enthusiasts through digital spaces, such These costs are measured by money, as mobile fitness apps and blogs. Newer time and uncertainty, so while newer entrants will not have these established entrants may have cheaper options, communities which consumers may consumers may be more hesitant to perceive as being a less reputable brand. try their products in terms of quality, customer service, availability and The extensive distributions channels customization.vi These firms also have that recognized brands have are also large capital investments, namely in not readily available to entrants. The top operations, research and development, competitors are not only able to bring and marketing/advertising. Newer their products directly to the consumer

DNike Running ‘14 - ‘18. FY18/19 Strategic Investment Report 5 Introduction External Assessment Internal Assessment Financial Analysis Final Recommendation Appendix

OPPORTUNITIES AND THREATS

LARGE WOMEN’S MARKET COUNTERFEIT GOODS

Looking externally at Nike’s environment, While Nike seeks many opportunities, there are plenty of opportunities that the external environment is also home Nike can, and is in the process to, take to threats that the company is subject advantage of. Improving Nike’s product to. A downside to Nike being the most mix to focus more heavily on women’s valuable sports brand in the world is apparel is where the company looks the threat of Nike counterfeit goods. for new pockets of growth. Although This can affect the overall brand image women’s apparel only represents less and dilute brand equity while leading to than 25% of Nike’s total sales, the US reduced revenue generation and lower women’s market for shoes and clothing profits.xi is larger than men’s. The company’s investment is not just recognized on RAPIDLY CHANGING CONSUMER the income statement, however. Nike PREFERENCES has established an outreach program where female athletes are sent to middle and high schools to speak to young Other threats include the inability girls about, and encouraging, their to anticipate consumer preferences involvement in sports.ix and develop products based on the constantly changing consumer demand. SUSTAINABILITY INNOVATION This threat hinders revenues and profits as well. More opportunities come in the form FOREIGN EXCHANGE LOSSES of utilizing their ability to foster creative and innovative ideas to increase sustainability efforts. This opportunity As Nike operates globally, the company could prove Nike to be a leader within is subject to the threat currency and and across industries during a time foreign exchange risk. This translates where it is imperative for companies into potential loss that could result from to incorporate corporate social fluctuating foreign exchange rates due responsibility into their strategy.x to the company’s exposure to foreign currency. While this is a major threat EMERGING MARKETS for most global companies, Nike does take action to mitigate the threat by operating a foreign currency adjustment A third opportunity arises in emerging program. The program manages this risk markets. Increasing presence in Asian by paying overseas factories in a basket and South American countries has of currencies that are adjusted for rate potential to offset saturation in North fluctuations.xii America and build upon its strong global brand recognition.

EGym, FWorldwide, GBars, HTheater Masks, IBrainstorm, JExchange. FY18/19 Strategic Investment Report 6 Introduction External Assessment Internal Assessment Financial Analysis Final Recommendation Appendix

POLITICAL MACRO FORCES As a global company, the ever-evolving political environment is of the most Six macroeconomic factors that affect all businesses are political, economic, social, importance to Nike’s long-term and technological, legal and environmental. While these factors are all important, the most short-term success. Political macro pressing of them are constantly changing as the world evolves and a company reacts. factors include being subject to At this time, though all macro forces are inevitably interconnected, the factors that we changes in tax and manufacturing laws believe most affect Nike’s business are political, economic and legal. While social, tech and imports and exports.xiii Currently, and environmental factors are also important, at this time they are seen as connected changes in U.S. trade policies under subsets of our three main macro factors discussed. the Trump administration, including new and potential tariffs or penalties on imported goods, may negatively affect Nike because of their reliance marketing techniques are among the on foreign production activities. These most crucial public events surrounding political discussions and potential Nike. These risks are difficult to predict retaliatory actions by affected countries and prevent, however Nike monitors could affect Nike’s cost structure. protectionist trends and developments These factors implicating international throughout the world that may materially operations are usual and constant risks impact the industry and engages in of doing business abroad. This includes administrative and judicial processes changes in foreign and domestic trade to mitigate trade restrictions. Nike policies, increase in import duties, anti- is “actively monitoring actions that dumping measures, trade restrictions, may result in additional anti-dumping quotas, safeguard measures, restrictions measures and… monitoring for and on the transfer of funds, and economic advocating against other impediments instability and terrorism.xii that may limit or delay customs clearance for imports of footwear, apparel and ECONOMIC equipment.”xii

Secondly, economic factors such as Mixing legal and social factors, Nike the threat of market collapse, available admits, “Negative claims or publicity resources to explore emerging markets, involving us, our products or any of our and the fluctuating cost of labor in key employees’ endorsers, sponsors or other countries make it imperative suppliers could seriously damage our that Nike mitigates risk when it comes reputation and brand image, regardless to converting currency and making of whether such claims are accurate. strategic decisions on expansionary Social media, which accelerates and projects. As a global company, Nike potentially amplifies the scope of conducts transactions in multiple negative publicity, can increase the currencies, which increases their challenges of responding to negative exposure to fluctuations in currency claims. Adverse publicity about exchange rates relative to the U.S. dollar. regulatory or legal action against us, or Looking at this risk, Nike admits that by us, could also damage our reputation “continued volatility in the markets and and brand image, undermine consumer exchange rates for foreign currencies confidence in us and reduce long-term and contracts in foreign currencies, demand for our products, even if the including in response to certain regulatory or legal action is unfounded xii policies advocated or implemented by or not material to our operations.” the U.S. presidential administration, These damages resulting from social and could have a significant impact on our legal repercussions have a direct effect reported operating results and financial on product sales, and therefore Nike’s condition.”xii financial condition as a whole could be adversely affected. However, we will see LEGAL later on how Nike mitigates these risks and consistently bounces back in the face of adversity. Looking at legal macro factors, tax breaks and legal repercussions for

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KEY SUCCESS FACTORS

For this industry the key factors to the unique ability of association with directly with that of an individual person success rely heavily on the firm’s ability sports and athletes. In this industry, who may or may not have the same to manage outside factors. As stated the consumer draws links between core values as that of the brand. In previously, this industry is differentiated, their favorite teams and idol athletes to some cases, these athletes do not draw meaning that brand loyalty is important these brands and makes purchasing the best attention to themselves or the to success. In order to keep loyalty, decisions based on those associations. partner brands, and this does affect the brands must be able to manage both Nike and others in the industry must consumer’s perception of the brands. the brand identity and the time to manage the brand image by managing Therefore, being able to manage these market. These two concepts are major their association with these athletes partnerships is a two-fold factor. On factors for success, but in order to and teams. The better the athlete or one hand the brand wants to associate support these two other factors come team performs, the better the brand itself with the athlete’s performance, but to play. Those two factors are human looks in the eyes of the consumers. on the other the brand must be able to capital retention and global distribution Ideally, if a brand can secure successful keep the association separate from the capabilities. Finally, a new factor is partnerships across multiple sports, athlete’s personal life. becoming necessary across the industry it will give the impression that these which can be defined by the direct-to- athletes success is due to the equipment TIME TO MARKET consumer market. worn. Brands in this industry make their money by selling products to the SPONSORSHIPS everyday athlete, and if they can install Time to market is a factor just as this ideology into the customer then important as management of the brand perception. To compete consistently Leading brands in this industry have they have won them over. However, the association that comes with partnerships in this industry a firm must be able to become successful by partnering and identify new trends, re-produce them, sponsoring with different teams and is a double-edged sword in that these brands are now associating their image then market and sell these trends all in a athletes. This has allowed these brands timely matter. As Nike puts it, “research,

KSerena Williams v. Carina Witthoeft at the 2018 U.S. Open. FY18/19 Strategic Investment Report 8 Introduction External Assessment Internal Assessment Financial Analysis Final Recommendation Appendix

KEY SUCCESS FACTORS

design and development efforts are key factors” to their success.xii Identification EMERGING SUCCESS FACTOR: DIRECT-TO-CONSUMER of new trends in itself is a major factor as the difference between a trend A final emerging key success factor in this industry is the ability to sell directly and a fad is a nuanced concept, but to consumers. As mentioned previously, this industry is moving more and more the ability to tell the difference is the towards direct brand interaction. This includes the use of websites, apps and difference between success and failure. direct ownership of retail locations. As this trend continues, the ability of a In addition to the subtle difference firm to excel at direct-to-consumer strategy is going to play a more important between fads and trends these firms role. This industry in the past was defined by third party retail sellers doing the are also dealing with the fact that an actual leg work, but now the third-party industry is in decline. The firms in this actual trend lifespan is shortened daily industry are forced to find ways to skip over the third party and sell directly due to internet availability. The speed to the customer. Currently firms are using apps, websites, and owned retail of dissemination caused by the internet locations to do this. The firm that manages these selling tools best will take an is leading to an ever growing need to advantage within the industry. identify and differentiate trends faster and faster. A mastery of this is only the first step in this key factor, as turning a trend into a mass-produced product Successful firms have developed a is an undertaking in and of itself. Firms global infrastructure of distribution must be able to produce these trends facilities and know that the operation of quickly, but also profitably. Not every these facilities is extremely important to trend can be mass produced and those operating their overall strategies. These that can may not even be a profitable networks are not built overnight, and undertaking, so overall the firm must instead have been refined over time to be able to identify those that can. Once become lean operations. Continued these concepts are identified the next research and capital dedicated to steps are marketing, distribution and improving these facilities is key to sale which are all difficult themselves. continuing to compete successfully. These last portions must all be done within a short time frame as the trends RECRUITMENT have a limited time in which they are at peak popularity. With time to market, firms are not only competing against Another secondary factor is a firm’s the lifespan of the concept but are also ability to retain quality personnel. Nike competing against each other. The explains it as “Our ability to recruit, fastest brands at getting a concept to retain and engage our personnel market are the ones that can enjoy the sufficiently, both to maintain our current most revenues from the concept before business and to execute our strategic xii the imitations are produced. The firm initiatives.” This retention is important that is quickest from trend spotting to as managing the brand image is not an sales has a major advantage over the easy undertaking, and past experience rest of the competition. here can be extremely beneficial. The same can be said for those employees GLOBAL DISTRIBUTION that are able to identify trends, as again this is not an easy task, especially when done without past experience. The need Two other major factors that can lead to retain these high-quality personnel to success are global distribution is one way to make sure your firm stays capabilities and human capital retention. ahead of the competition. This becomes As mentioned above, time to market even more important when you think is an extremely important factor, but about the fact that when a firm loses one this also relies on the firm’s ability to of these employees it is likely them using deliver the product in a timely manner. their expertise to benefit a competitor.

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BOUNCE BACK FACTOR ways to improve both theirs and Tiger’s One example of this was when image. Surprisingly, within a month of the TIGER WOODS professional golfer Tiger Woods had a scandal being announced, Nike stock DUI and an infidelity whirlwind scandal began to pick up, and before the end Within this industry managing your that lasted nearly a month. Woods was of the year had returned to pre-scandal brand image is a key success factor, and one of the biggest names in sports at levels. Tiger went on to struggle for a few Nike has been one of the best at doing the time, and the face of the Nike Golf years, but in 2019 returned to win his 5th this. This can be seen in their ability to product line. The Tiger Woods incidents masters. The estimated exposure of the continuously sign new athletes and their occurred in late 2009 and sent his image, original airing of his win is estimated to consistent dominance of college football, as well as any brand associated with have received $22 million dollars’ worth NFL, and recent NBA sponsorship him, into disarray. Nike later estimated of exposure.xv agreements. With that being said, Nike that $1.7 million in sales and nearly has had its fair share of controversial 105,000 customers had been lost during moments. These situations force Nike to the course of the scandal.xiv Stock prices show why it is the best at managing their plummeted as Nike and other brands brand, but they do much more than just debated exactly what to do with Woods. manage the situation. Nike has a unique Nike decided to remain steadfast with ability to bounce back quickly from these Woods, claiming they sponsored him for situations. When a controversial situation his on-the-field performance and not his arises, a firm will typically see declines in off-the-field antics. The situation hit rock many ways, including sales, perception bottom when fellow sponsor Gatorade and stock value. Like most other brands, pulled their sponsorship, but still Nike Nike sees its fair share of controversies remained. Nike relied on their ability and has seen these declines as well, and to manage their brand and worked on sometimes much more aggressively.

NIKE STOCK PRICE: NOVEMBER 3, 2009 - DECEMBER 23, 2009xvi

GATORADE ENDS DRINK CONTRACT AND WOMAN SPEAKS OUT ON TV

CAR CRASH AND BEGINNING OF SCANDAL

TIGER ANNOUNCES INDEFINITE RECOVERY BEGINS IN LEAVE FROM GOLF LESS THAN ONE MONTH

LTiger Woods wins the 2019 Masters. FY18/19 Strategic Investment Report 10 Introduction External Assessment Internal Assessment Financial Analysis Final Recommendation Appendix

BOUNCE BACK FACTOR COLIN KAEPERNICK

A second situation in which Nike was miraculously able to bounce back was in their signing of controversial athlete Colin Kaepernick. In early September 2018, Nike announced the signing of Colin Kaepernick, the former NFL star who had controversially begun protesting the national anthem.

This was an extremely polarizing decision and led to many critics taking extreme measures to show their disapproval, including burning of Nike gear and boycotting of the brand. Later it would be revealed that Nike customer purchase likelihood dropped from 61% to 49% for consumers aged 65+. xvii

Nike again saw a massive dip in stock price immediately after the announcement but went to work managing their image. The decision itself had been made to pair with the new Nike Direct initiative and the companies desire to promote what was important to their core customers. This paid off as the brand saw consumer purchase likelihood in the 18-29 age group increase to over 70%. Sales grew 31% over the Labor Day weekend, and what seemed like a huge mistake had clearly turned around.xvii

As with Tiger and many others before, the stock found a way to bounce back to pre-controversy prices, and this time did so in less than a week. Ultimately, both of these examples not only show Nike’s keen ability to manage its brand image, but also show the unique quality of Nike stock being able to bounce back with extreme speed. This ability alone shows that Nike is surprisingly resilient to public perception, and is one reason why Nike is a company that should be invested in.

NIKE STOCK PRICE: AUGUST 31, 2018 - SEPTEMBER 11, 2018xviii

NIKE ANNOUNCES SIGNING KAEPERNICK RECOVERY BEGINS WITHIN DAYS OF AIRING

AD PREMIERES DURING NFL KICKOFF STOCK HITS ALL-TIME HIGH (AT THE TIME)

MNike Colin Kaepernick Billboard. FY18/19 Strategic Investment Report 11 Introduction External Assessment Internal Assessment Financial Analysis Final Recommendation Appendix

INTERNAL ASSESSMENT

NXavier Taylor for Nike. FY18/19 Strategic Investment Report 12 Introduction External Assessment Internal Assessment Financial Analysis Final Recommendation Appendix

COMPETITIVE ADVANTAGES

Nike is known as the top athletic footwear and apparel brand in the world, and they have been able to gain and maintain that reputation through a clearly defined vision, mission, and overarching strategy that link with one another. Their vision is to “Bring inspiration and innovation to every athlete in the world.” Nike believes that everyone with a body is an athlete, and that they can appeal to every type of person, from a casual fitness enthusiast to the world’s top athletes. They do this by working toward their goals of making innovative products that are sustainable and by fostering a creative and diverse global work team to stay at the forefront of the industries they compete in while catering to the needs of communities around the world.xix

These goals are achieved by Nike’s central strategy: to produce products that are deemed as “must-haves” in the public eye, to build deep connections with their customers, and deliver personal experiences through both digital and retail spaces.

OUR MISSION: BRING INSPIRATION AND INNOVATION TO EVERY ATHLETE* IN THE WORLD.

*If you have a body, you are an athlete.

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COMPETITIVE ADVANTAGES

These key business aspects of Nike have been and continue to be exhibited through their actions and milestones. In 1988, Nike launched the “” campaign, which revamped their limited targeting from only professional and collegiate athletes to include any and everyone, regardless of age, gender, race and abilities. This campaign was used to incite personal inspiration for consumers to overcome their obstacles and proved to be successful; from 1988 to 1998, Nike increased their domestic market share from 18% to 43%. This served as a pivotal moment in the athletic footwear industry, as sneakers were not only perceived to be used for athletic purposes, but as considerable fashion choices.xx

Other notable achievements include the launch of Nike ID in 1999, which allowed for the mass customization of their products for consumers.xxi This technology is still prevalent today, as the launch of Nike+ in 2006 combined Nike and Apple products for workout tracking and community building, fostering a global movement towards connectivity in the health and wellness industry.xxii This has since evolved into the workout digital application lifestyle. Most recently, as aligned with their strategy and as evidence of their dedication to the digital space, Nike announced their new direct-to-consumer initiative known as the Direct Consumer Offense. This includes the organizational restructuring of a new branch called Nike Direct that aims to better serve their customers through personal and meaningful experiences powered by a new strategy implementation.xxiii

O Nike+ Run Club App for Apple Watch. FY18/19 Strategic Investment Report 14 Introduction External Assessment Internal Assessment Financial Analysis Final Recommendation Appendix

THE NEW RETAIL the relationship between physical and 2x Innovation digital retail channels. Utilizing both Nike is moving from seeding to scaling NIKE DIRECT of these channels, there is a built-in faster. They will give consumers better feedback loop of customer data that choices to match their preferences and In 2017, Nike announced their “Triple flows from its apps into its stores. they will set a new expectation for style, Double Strategy” which focuses on Through this omnichannel approach in creating a new aesthetic to wear in all iii doubling the innovation, speed to market Nike Live stores located in New York moments of consumers’ lives. and direct customer connections at and Shanghai, consumers can app- Nike through multiple initiatives. Nike reserve sneakers to be picked up in 2x Speed Direct serves as Nike’s consumer- store lockers, mobile checkout, and buy Nike is investing in digital end-to-end direct offense in an increasingly digital online. The goal is to create a frictionless to serve an instiable consumer demand world that is beginning to phase out the experience where store merchandising for new and fresh products. They are traditional retail stores of the past. The strategies come from app user data in building new capabilities and analytics company is not waiting for a new brand the area.xxv Nike has seen very positive to deliver personalized products in to disrupt the industry but disrupting it outcomes as a result of this strategy, as real time, and are engaging with more themselves.xxiv the company posted their first billion- partners, companywide, to move faster iii dollar e-commerce quarter in Q4 2018. against their goals. This direct-to-consumer division is Nike sees digital as not only a part of the aimed to accelerate growth through shopping experience, but the foundation 2x Direct product innovation, local key cities of it. They want as many Nike touch points and one-to-one connections with as possible to live up to consumer customers. Nike is evolving based on expectations. Nike is investing in its own the needs of the consumer by tightening channels and leading with digital.iii

Powered by Nike digital commerce data, Nike opened its newest Nike House of On the fifth floor is Nike Expert Studio, and inspired by Nike’s newest retail Innovation, a 68,000 sq. ft., six-level, where consumers gain access to concept, Nike Live, the Nike Speed cross-category premium Nike store elevated service offerings through on- Shop delivers on-the-go access to NYC located in New York City as part of their to-one appointments with Nike Experts favorites.P Nike Direct initiative.P (bookable through the Nike App or in- store).P

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STRENGTHS AND WEAKNESSES

BRAND RECOGNITION GLOBAL LABOR CONDITIONS

To look internally, Nike has many One of Nike’s internal weaknesses is strengths that have set the company the negative publicity Nike has received apart from competitors for decades. because of conditions in the overseas Nike’s primary strength is their brand factories. Although Nike outsources its recognition. There is significant manufacturing aspects, all points in the amount of brand equity that comes supply chain are susceptible to harming from high quality products, high-class the company’s brand image. To combat performance, reliability and innovative this, Nike has undertaken efforts to style. Recognition also comes in the improve conditions for over one million form of appeal around the world tied contract workers. to status among celebrities and sports professionals. The company stands U.S. MARKET DEPENDENCY out in a crowded sportswear retailing market by focusing on their audience, Another weakness is Nike’s reliance, messaging and product lines. Nike’s or dependency, on sales from the brand strength allows the company United States market. Year over year, flexibility to take risk or raise prices when the US market has remained flat and is necessary with their 31% share of the now declining in a saturated athleisure global athletic footwear market. and footwear market. While this is a concern to Nike, the 42% of sales MARKETING AND ADVERTISING revenue that comes from the United RESOURCES States shows less reliance on the U.S. than competitors like Under Armor, who generates 85% of their sales revenue Another strength that allows Nike to xxvi maintain their brand and reputation is from the United States. their capability to allocate resources to marketing and advertising. The RELIANCE ON RETAIL company has spent over $3 billion on marketing and advertising per year Other weaknesses arise from Nike’s in 2016, 2017 and 2018. This high reliance on third-party retail outlets, investment in marketing pays off as like Dick’s Sporting Goods or Foot a source of competitive advantage Locker, and the declining revenues those while the company’s competitors are companies are experiencing. Seventy focused heavily on catching up to the percent of Nike’s stocks were sold most recognizable footwear brand in the directly to wholesale distribution in 2018, world. so continued reliance on third-party retailers could decrease sales revenue, DIGITAL SALES increase accounts receivable, and increase bad-debt expense, all reducing xxvii Nike’s current strategy is relying cash flow. increasingly on digital and social media promotion. Keeping up with this need for unique touchpoints, Nike’s FY17 saw a 30% growth in digital commerce sales at $2.2 billion, numbers that only continue to grow.xii

QSunglasses, RPromotion, SOnline Shop, TWrench, UUnited States Flag, VRetail. FY18/19 Strategic Investment Report 16 Introduction External Assessment Internal Assessment Financial Analysis Final Recommendation Appendix

FINANCIAL ANALYSIS

WMan soaring through air in Nike. FY18/19 Strategic Investment Report 17 Introduction External Assessment Internal Assessment Financial Analysis Final Recommendation Appendix

REVENUE

As a whole, Nike Inc. has been enjoying NIKE, INC. CONSOLIDATED OPERATING RESULTS - REVENUESxii stable increases in revenue year over year. In fiscal year 2018, Nike Inc. earned Nike Brand Revenues by: (in millions) FY18 FY17 FY16 $36.4 billion in revenue, a 4% increase from FY2017.* These revenues include Footwear $22,268 $21,081 $19,871 all Nike Brand revenues – footwear, Apparel 10,733 9,654 9,067 apparel, equipment and global brand Equipment 1,396 1,425 1,496 division – plus revenues from Converse Global Brand Divisions (3) 88 73 73 and Corporate. TOTAL NIKE BRAND REVENUES $34,485 $32,233 $30,507 Nike Brand revenues increased a Converse 1,886 2,042 1,955 comparable 4% in FY18, from $32.2B to Corporate (4) 26 75 -86 $34.5B. Of the four major segments in TOTAL NIKE, INC. REVENUES the Nike Brand, shoes remain the largest $36,397 $34,350 $32,376 portion at 64.6% of brand revenues and 61.2% of Nike Inc. revenues. Shoe Supplemental Nike Brand Revenues Details: revenues broke $20B in 2017 and has Nike Brand Revenues By: since grown to $22.3B in FY18. Nike Brand apparel made up the second- Sales to Wholesale Customers 23,969 23,078 22,577 largest portion of revenues at a 9% rise Sales through Nike Direct 10,428 9,082 7,857 from $9.7B in FY17 to $10.7B in FY18. Global Brand Divisions (3) 88 73 73 Apparel accounts for 31.1% of brand TOTAL NIKE BRAND REVENUES revenues and 29.5% of total revenues. $34,485 $32,233 $30,507 Despite the increased Nike revenue, equipment has been on the decline Nike Brand Revenues on a Wholesale Equivalent Basis: since 2016. In FY18, equipment fell from Sales to Wholesale Customers 23,969 23,078 22,577 $1.43B to $1.40B, a 4% drop. Equipment Sales from Wholesale Operations to Nike Direct 6,332 5,616 4,672 made up about 4.05% of brand revenues and 3.8% of total revenues, falling below TOTAL NIKE BRAND WHOLESALE EQUIVALENT REVENUES $30,301 $28,684 $27,249 Converse at 5.2%. The final Nike brand revenue, Global Brand Divisions, grew Nike Brand Wholesale Equivalent Revenues by: the most between FY17 and FY18, up to $88 million, a 12% increase. This division Men’s 17,114 16,041 15,410 makes up only 0.2% of both revenues.xii Women’s 6,915 6,644 6,296 Young Athletes’ 4,906 4,838 4,560 Between Nike Brand footwear, apparel Others 1,366 1,171 983 and equipment, apparel is making the TOTAL NIKE BRAND WHOLESALE EQUIVALENT REVENUES largest climb in revenues from FY2016 $30,301 $28,694 $27,249 to FY2018 with an 18.37% increase. Footwear comes in close behind with Nike Brand Wholesale Equivalent Revenues by: 12.06% growth from FY16 to FY18. Running 5,198 4,860 4,401 Much of this rise in Nike Brand revenue can be attributed to the 32.7% rise in Nike Basketball 1,494 1,292 1,378 sales through Nike Direct Operations. As Jordan Brand 2,856 3,098 2,753 Nike continues to invest into its new Nike Football (Soccer) 2,146 1,984 2,143 Direct division, its sales to wholesale Training 3,126 3,080 3,150 customers are slowing, with only a 6.2% Sportswear 10,018 8,988 8,129 growth from FY16.xii Others 5,463 5,392 5,295

TOTAL NIKE BRAND WHOLESALE EQUIVALENT REVENUES $30,301 $28,684 $27,249

*All percentages are excluding currency changes. FY18/19 Strategic Investment Report 18 Introduction External Assessment Internal Assessment Financial Analysis Final Recommendation Appendix

REVENUE

On a global basis, Nike has worked to consolidate its existing geographic structure from six regions to four to accommodate its new Nike Direct division and Triple Double Strategy. Global regions now include North America; Asia Pacific & Latin America (APLA); Europe, Middle East & Africa (EMEA); and Greater China. Despite this consolidation, North America still makes up over 43.08% of total global brand revenues and may offset major changes in other regions. Nike Direct is targeting 12 major cities, across 10 major countries, which are expected to represent 80% of Nike’s projected growth through 2020.xii

COUNTRIES IN WHICH NIKE HAS STORES AND/OR A DIRECT ONLINE PRESENCExxviii

NORTH AMERICA

GREATER CHINA

ASIA PACIFIC AND LATIN AMERICA

EUROPE, MIDDLE EAST AND AFRICA

XNike Launches Pro Hijab for Muslim Women Athletes. FY18/19 Strategic Investment Report 19 Introduction External Assessment Internal Assessment Financial Analysis Final Recommendation Appendix

INCOME STATEMENT

Since the announcement of Nike Direct NIKE, INC. CONSOLIDATED INCOME STATEMENTxii in mid-2017, Nike has committed substantial investment and resources For Year Ended, May 31 into the new store-fronts. The new stores require fixed investment in (in millions, except per share data) FY18 FY17 FY16 equipment and leasehold improvements, Revenues $36,397 $34,350 $32,376 information systems and personnel. Due to this continued investment, operating Cost of sales 20,441 19,038 17,405 overhead expense saw an increase in Gross Profit 15,956 15,312 14,971 every global region for FY18. For Nike as Demand creation expense 3,577 3,341 3,278 a whole, operating overhead has grown Operating overhead expense 7,934 7,222 7,191 10% since FY16, which represents Nike Total selling and administrative expense 11,511 10,563 10,469 from its pre- Nike Direct stages to now. Interest expense (income), net 54 59 19 Demand creation expense has also seen an increase in FY18, albeit a little smaller Other expense (income), net 66 (196) (140) at 9%.xii Income before income taxes 4,325 4,886 4,623 Income tax expense 2,392 646 863 As these costs are expected to continue NET INCOME to increase over the next few years, $1,933 $4,240 $3,760 Nike’s financial health can be evaluated Earnings per common share: from its margins. Comparable to the apparel and textile industry, Nike is Basic $1.19 $2.56 $2.21 outperforming not only their direct Diluted 1.17 2.51 2.16 competitors, but the entire industry. Dividends declared per common share 0.78 0.70 0.62 With a FY18 operating margin (OPM) of 12.21% and a recently reported Q3 FY19 margin of 12.40%, Nike has kept a stable and consistent margin over the NIKE, INC. RETURN ON INVESTMENT (OPERATING)xii VS. COMPETITORS past five years. It is not shown to be a very highly variable margin, indicating FY18 FY17 FY16 FY15 FY14 little risk for investors to be concerned. OPM is expected to rise from its FY18 Nike, Inc. 29.36% 32.40% 32.74% 32.36% 28.92% number for FY19, as Nike Direct settles Under Armour -0.88 0.96 16.06 20.57 24.92 in and begins to bring in more revenue. Adidas 18.96 26.44 18.53 14.13 12.33 For Nike, the most important measure is the gross margin (GPM). Gross margin Asics 4.34 7.46 9.79 10.32 7.80 has taken a slight dip since FY16, falling INDUSTRY AVERAGE 12.95% 16.82% 19.28% 19.34% 18.49% from 46.20% to 43.80% in FY18, but this is due to the rising cost of goods sold. Recent Q3 FY19 reports have given light climb back up in FY19 and continue its (-0.88%). This metric indicates Nike’s to a 44.10% GPM for Nike, continuing consistent growth as in the past. Nike ability to utilize their investments well to majorly outperform both the industry Direct has played a major part in all of enough to gain a return while continuing and the sector. Nike’s financial health for FY18.xxix to outperform their competitors’ year over year. The 3% decline is attributed To boost revenues, Nike has reported With all the new investments for Nike to the decline in operating income for raising the ASP (average selling price) for Direct, Nike’s Return on Investment for the recent fiscal year, which was greater both footwear and apparel to make up their operating income can be assessed. than the decline in invested capital. for the declining unit sales. They are also Over the past 5 years, Nike has kept a moving away from third-party retailers relatively stable ROI. In FY18, ROI took to drive their new direct-to-consumer a slight dip down to 29%, but remained strategy. Nike saw a decline in the net higher than major competitors like profit margin in FY18, from 12.30% to Adidas (18.96%) and Under Armour 5.30%. Net profit margin is expected to

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A CLOSER LOOK INCOME STATEMENT

NIKE, INC. OPERATING MARGIN OVER TIMExii VS. COMPETITORS Nike’s operating margin (OM) represents the percentage of profit they produce 15.00% from operations. Nike shows a relatively stable OM over the past five years, continuously above average and higher than its competitors. It is not shown to 10.00% be highly variable, indicating little risk change. Compared to its competitors, Nike’s OM shows that they are well managed and that they are efficiently 5.00% managing their expenses to maximize profitability. 0.00% EBIT only declined in FY18 for North America, but due to the large proportion of revenues coming from this region, -5.00% this offset the increases in other regions. 2014 2015 2016 2017 2018 EBIT decline is primarily due to the increased selling and administrative Nike, Inc. Under Armour Adidas Asics expenses from investments in Nike Industry Average Direct. This shows that Nike is doing their core business well.

NIKE, INC. RETURN ON INVESTMENT (OPERATING) OVER TIMExii VS. COMPETITORS Nike has enjoyed a relatively stable return on investment (ROI) on their 40.00% operating income over their competitors. This indicates that they can utilize their investments well enough to gain a return while outperforming others in 30.00% the industry. Decline in FY18 is due to decline in operating income which was greater than the decline in invested capital. 20.00%

Invested capital is an average of the current FY and FY prior. Invested capital 10.00% declined in FY18 due to the decline in SE and increase in total debt.

0.00%

-10.00% 2014 2015 2016 2017 2018 Nike, Inc. Under Armour Adidas Asics Industry Average

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BALANCE SHEET

Nike’s balance sheet for FY18 saw NIKE, INC. CONSOLIDATED BALANCE SHEETxii numerous adjustments, leading to a decline in total assets and liabilities. For Year Ended, May 31 Nike saw an 11.6% increase in their cash and equivalent holdings, but with a (in millions) FY18 FY17 FY16 large decline in short-term investments ASSETS and accounts receivable, total assets saw a 3% overall decrease. On their Current Assets: liabilities, current liabilities rose due to Nike increasing their notes and Cash and equivalents $4,249 $3,808 $3,138 accounts payable, but the most notable Short-term investments 996 2,371 2,319 movement was the $2.6 billion decline in Accounts receivable, gross 3,528 3,696 3,284 shareholders’ equity. This decline comes Less: allowance for uncollectable accounts -30 -19 -43 about from the two share repurchase receivable programs that have been approved. In 2015, Nike’s Board of Directors approved Accounts receivable, net 3,498 3,677 3,241 a four-year, $12 billion share repurchase Finished goods 5,261 5,055 4,838 of their Class B common stock. Inventories 5,261 5,055 4,838 Deferred income taxes - - - Pending the completion of this program, Prepaid expenses and other current assets 1,130 1,150 1,489 the Board has also just approved another four-year, $15 billion share TOTAL CURRENT ASSETS $15,134 $16,061 $15,025 repurchase. This program has played a large role in Nike’s ability for their Property, Plant and Equipment: shareholder’s equity to cover all outstanding debts in the event of a Land 331 285 286 downturn. Nike’s total debt to equity Buildings 2,195 1,564 1,467 ratio (D/E) has historically remained Machinery, equipment and internal-use software 4,230 3,867 3,510 around 7% but has seen rapid growth Leasehold improvements 1,494 1,484 1,338 since the approval of the repurchases in Construction in process 641 758 437 2015 to a ratio of 39% in FY18. This rise is undoubtedly due to the sharp decline TOTAL PROPERTY, PLANT AND EQUIPMENT, GROSS $8,891 $7,958 $7,038 in shareholder’s equity coupled with the Less: accumulated depreciation -4,427 -3,969 -3,518 increasing notes payable to help finance PROPERTY, PLANT AND EQUIPMENT, NET Nike Direct. $4,454 $3,989 $3,520

Other Assets:

Identifiable intangible assets, net 285 283 281 Goodwill 154 139 131 Deferred income taxes and other assets 2,509 2,787 2,439

TOTAL ASSETS $22,536 $23,259 $21,396

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BALANCE SHEET

Although the ratio is higher than NIKE, INC. CONSOLIDATED BALANCE SHEETxii competitors, like Adidas at 28% and Under Armour at 35%, Nike remains For Year Ended, May 31 lower than the consumer non-durables sector average which is at almost (in millions) FY18 FY17 FY16 64%. In recent Q3 FY19 reports, Nike’s LIABILITIES AND SHAREHOLDER’S EQUITY PT.1 D/E ratio is on the decline (currently 31.8%), as this surge is expected to Current Liabilities: be a temporary reaction to the new investments and repurchase. Nike Current portion of long-term debt $6 $6 $44 remains confident in their ability to Notes payable 336 325 1 service their debt through cash flow, Accounts payable 2,279 2,048 2,191 and also use the leverage to increase Accrued compensation and benefits, 897 871 943 equity returns. In addition, due to their excluding taxes increased D/E, Nike saw a record low in ROE for FY18 at 17.4%, but at Q3 Accrued endorsement compensation 425 396 393 FY19, ROE has recovered and is at a Accrued dividends payable 320 300 271 high of 45.8%. This is a measure of Accrued import and logistics costs 268 257 198 how much profit Nike generates using Accrued taxes other than income taxes 224 196 159 the money shareholders have invested. Accrued fair value of derivatives 184 168 162 Generally, the industry average has been at 14.15% and 13.09% for the sector. Accrued advertising and marketing 140 125 119 Even at their lowest point, Nike was still Accrual collateral received from 23 - 105 outperforming the market.xxx counterparties to hedging instruments Other accrued liabilities 788 698 687 Accrued liabilities 3,269 3,011 3,037 Income taxes payable 150 84 85

TOTAL CURRENT LIABILITIES $6,040 $5,474 $5,358

Long-term Debt:

Corporate bond payables $3,459 $3,456 $1,989 Promissory notes - - 38 Japanese Yen notes 15 21 27 Less: current maturities -6 -6 -44

TOTAL LONG-TERM DEBT $3,468 $3,471 $2,010

Other long-term liabilities:

Deferred income taxes and other liabilities $3,216 $1,907 $1,770

TOTAL LIABILITIES $12,724 $10,852 $9,138

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A CLOSER LOOK BALANCE SHEET

NIKE, INC. CONSOLIDATED BALANCE SHEETxii

For Year Ended, May 31

(in millions) FY18 FY17 FY16 LIABILITIES AND SHAREHOLDER’S EQUITY PT.2

Stockholder’s Equity:

Class B common stock $3 $3 $3 Capital in excess of stated value 6,384 8,638 7,786 Foreign currency translation adjustment -173 -191 -207 Cash flow hedges 17 -52 463 Net investment hedges 115 115 115 Other accumulated other comprehensive -51 -85 -53 income (loss) Accumulated other comprehensive income -92 -213 318 (loss) Retained earnings 3,517 3,979 4,151

TOTAL SHAREHOLDER’S EQUITY $9,812 $12,407 $12,258

TOTAL LIABILITIES AND SHAREHOLDER’S EQUITY $22,536 $23,259 $21,396

NIKE, INC. CLASS B COMMON STOCK RETURNS OVER TIMExii VS. COMPETITORS This graph is an indication of the total cumulative return given a $100 $250.00 investment in 2013 as compared to the S&P 500 and DOW Jones Footwear index. As shown on the graph, the return continously increases and remains $200.00 higher than the other three indexes. Nike is not only beating their competitors, but they are also beating the market indexes. $150.00

$100.00

$50.00

$0.00 2013 2014 2015 2016 2017 2018 Nike, Inc. S&P 500 Index - Total Returns S&P 500 Apparel, Accessories and Luxuries DOW Jones U.S. Footwear Index

YTying Nike Shoes. FY18/19 Strategic Investment Report 24 Introduction External Assessment Internal Assessment Financial Analysis Final Recommendation Appendix

FINAL RECOMMENDATION

ZNike Sports Bra Campaign Ft. Lena Meyer Landrut. FY18/19 Strategic Investment Report 25 Introduction External Assessment Internal Assessment Financial Analysis Final Recommendation Appendix

WHY YOU SHOULD INVEST

It is not simply because Nike is the market leader that they qualify as a good investment. Their proven ability to fight constant criticism, manage perceptions, and evolve their brand through innovation and market disruption is what allows them to rise to the occasion. As we’ve discussed, Nike has a consistent track record of not only being able to recover after unforeseen challenges, but an ability to repeatedly surpass their record stock prices. This resilience and determination are not only something that Nike preaches to its customers but is a part of the company’s history and culture as a whole, making them a solid long-term bet in one’s portfolio.

“NIKE IS ABOUT INNOVATION, ABOUT HONESTY AND INTEGRITY, AND ABOUT COMPETITIVENESS. THOSE ARE THE THINGS THAT WE STAND FOR AND WE WANT OUR PEOPLE TO BELIEVE IN.”

Phil Knight, Co-Founder, Nike, Inc.iii

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APPENDIX

AANike Tech Pack Editorial Ft. Stefanie Giesinger. FY18/19 Strategic Investment Report 27 Introduction External Assessment Internal Assessment Financial Analysis Final Recommendation Appendix

PORTER’S FIVE FORCES CONT.

BARGAINING POWER OF SUPPLIERS and sell their own athletic shoe products; THREAT OF SUBSTITUTES they are dependent on the corporations The bargaining power of suppliers is for business. The threat of substitutes is a weak force a low-to-moderate force due to the due to the fact that there is no technical availability of various suppliers and BARGAINING POWER OF BUYERS substitute to athletic footwear. Other the effects suppliers may have on substitutes include casual shoes, boots production. Most athletic footwear The bargaining power of buyers is also and dress shoes. While these may sell brands outsource their production a low-to-moderate force due to the at a lower price for consumers and from outside of the United States to abundance of individual consumers and present low switching costs, they do reduce their production costs and are the options available in the marketplace. not serve the same purpose nor have found near raw material sources. While As competitors in the industry move the same function as a sneaker. For suppliers may threaten buyers with toward selling directly to end consumers, instance, the sporting industry requires increased prices or declining quality, consumer loyalty increases in an already footwear with durability and features there is an abundance of suppliers differentiated industry.vi Companies such as strong grips and arch support. with access to the same raw materials are also focused on developing new The threat of substitutes is also lessened needed, such as natural and synthetic designs and products to maintain their due to consumers wanting the quality, rubber, plastic compounds and large customer bases and decrease customization and customer service iv canvas. However, changing existing buyer power; this is to keep a focus on they are accustomed to in the athletic cost or quality still poses a risk as design, performance and quality and footwear industry. However, there is a manufacturing sites may not be able increase the number of individual buyers. threat of counterfeit products being sold to find adequate alternate sources in vii However, buyer power increases as to consumers. For instance, Amazon had a timely manner due to cost or quality buyers become more knowledgeable and unauthorized Nike products for sale on standards. This can lead firms in the more options are available from other their marketplace platform in 2017, along xxxi market to experience production delays, brands. Third-party retail buyers’ power with counterfeit products. Nike had which increases time-dependent costs. is also decreasing as firms look to have been hesitant to sell their products on As more firms strive to meet consumer a more direct path to end consumers. Amazon due to it potentially damaging demand, these risks could negatively E-commerce and digital selling platforms their brand; however, the present threat affect revenues and net income in both have increased in popularity, and third- of imitation could not be ignored and xii the short- and long-term. This force is party retail sales have been on the Nike agreed to sell products through also lessened as suppliers very rarely decline. Amazon in exchange for Amazon’s vertically integrate forward. That is, regulation of counterfeit products suppliers do not move to manufacture through a certified brand registry.xxxii

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MACRO FORCES CONT.

SOCIAL

In terms of macro forces, social factors such as a worldwide increase in health consciousness and public criticism of production processes are moderate influencers of Nike’s business.xiii With the growing popularity of athleisure and the health conscious movement, Nike has capitalized on its strong influence of pop culture to help drive these trends. For example, in addition to their regular athletic clothing line, they also make and sell a premium sports brand, called Nike Sportswear, as well as a premium streetwear brand called Nike Lab. Nike Lab frequently collaborates with some of the most highly valued tastemakers such as Supreme, APC and Comme des Garçons. This use of pop culture figures in music, fashion and athletics as well as superior social listening tools have helped Nike to further widen the definition of an athlete and broaden their consumer base.xxxiii

On the flipside, Nike has been plagued by reports and criticism of sweatshops and child labor since the 1990s.xxxiv While Nike does not own or operate any of the footwear manufacturing facilities and depend upon independent contractors to manufacture all of their products, the intense scrutiny of their practices has been in the public eye for decades. However, since committing to fixing the problem in 1998, Nike has managed to turn its image around, once again showing their ability to bounce back from adversity. In 2005, Nike published with consumers and gain business a detailed 108-page report providing insights are of relatively low risk to transparency to shareholders and Nike’s overall business. While they do customers by revealing conditions and rely heavily on information technology pay in its factories and acknowledging to operate their business, Nike has the remaining issues.xxxv resources to be able to combat any foreseeable problems or interruptions TECHNOLOGICAL such as security breaches, repairs or replacements.xii Technological factors such as the rapid dispersion of information via social media and growing use of data analytics to optimize relationships

DNike Running ‘14 - ‘18. FY18/19 Strategic Investment Report 29 Introduction External Assessment Internal Assessment Financial Analysis Final Recommendation Appendix

MACRO FORCES CONT.

ENVIRONMENTAL billion plastic bottles have been diverted resources to allocate to innovation, they from landfills and converted into recycled are able to mitigate many environmental The last macro force with a low impact polyester for their clothing lines, such as risks and continue to set new standards on Nike’s business are environmental the Nike Vapor football kits.x for activewear manufacturing. factors. Because of the growing transparency standard and informed Since the uncovering of several negative customers, consumers are more and labor and environmental practices, Nike more interested in Nike’s sustainability has made considerable steps to combat efforts. In recent years, Nike has focused these perceptions and improve upon on halving its environmental impact existing systems. Hannah Jones, Nike while doubling its manufacturing rate, Chief Sustainability Officer and Vice progressing towards a cleaner and President of their innovation accelerator leaner production system.xxxvi This said Nike “really started to look into initiative revolves primarily around three what were the things within our business aims: minimize environmental footprint, that we could change or do better, such transform manufacturing and unleash as our purchasing practices, such as human potential. Nike has enacted this teaching designers how to design with through the introduction of their Flyknit sustainability in mind… [sustainability] technology, which combines maximum moved from being a risk and reputation athletic performance while producing function to being a business lever 60% less waste than traditional cut-and- function to being an innovation sew methods. In addition, more than 3 function.”xxxvii Because Nike has the

ACNike Cortez Campaign. FY18/19 Strategic Investment Report 30 Introduction External Assessment Internal Assessment Financial Analysis Final Recommendation Appendix

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FY18/19 Strategic Investment Report 32 Introduction External Assessment Internal Assessment Financial Analysis Final Recommendation Appendix

PHOTOGRAPHY CREDITS

A Acomb, James. “Nike Women: Casey.” L Shapiro, Michael. “Tiger Woods Wins U “United States Flag” Icon made James Acomb Photography, James the 2019 Masters.” Sports Illustrated, TI by Freepik on https://www.flaticon. Acomb, 2017, jamesacomb.com/Nike- Gotham Inc., 14 Apr. 2019, www.si.com/ com/free-icon/united-states-of- Women:-Casey/thumbs. golf/2019/04/14/tiger-woods-masters- america_1729800. win-nike-ad-major-championship-just- B Shank, Niv. “Man Stretching on Beach do-it. V “Retail” Icon made by Freepik on in Red Nike Athletic Wear.” Niv Shank https://www.flaticon.com/free-icon/ Photography, Niv Shank, www.nivshank. M Suzuki, Lea. “Nike Colin Kaepernick shop_1067602. com/photography-2/nike-commission. Billboard.” SF Gate, Hearst Magazines, 7 Sept. 2018, www.sfgate.com/business/ W Barisonzi, Laura. “Man Soaring C Acomb, James. “Nike Women: Gilda.” article/Nike-orders-rose-in-four-day- through Air in Nike.” Laura Barisonzi James Acomb Photography, James period-after-13212889.php. Photography, Laura Barisonzi, barisonzi. Acomb, 2017, jamesacomb.com/Nike- com/Fitness/16. Women:-Gilda/6. N Batt, Andy. “Xavier Taylor for Nike.” Behance, Andy Batt, 6 Oct. 2017, www. X Balla, Vivienne. “Nike Launches Pro D Daub, David. “Nike Running ‘14 - ‘18.” behance.net/gallery/57499031/2018- Hijab for Muslim Women Athletes.” David Daub Photography, David Daub, Nike-Basketball-tennis-running-adidas- Fortune, Fortune Media IP Limited, 7 daviddaub.com/nike-running/. soccer. Mar. 2017, fortune.com/2017/03/07/nike- pro-hijab-muslim-athletes/. E “Gym” Icon made by dDara on O “Nike+ Run Club App for Apple https://www.flaticon.com/free-icon/ Watch.” Apple Newsroom, Apple Y Daub, David. “Tying Nike Shoes.” woman_753045. Inc., 24 Oct. 2016, www.apple.com/ We Art, We Art Agency, weart.co/ newsroom/2016/10/apple-watch-nike- photographers/david-daub/#gallery/28. F “Worldwide” Icon made by turkkub plus-arrives-friday-october-28/. on https://www.flaticon.com/free-icon/ Z Daub, David. “Nike Sports Bra worldwide_814587. P “Nike Opens Nike NYC House of Campaign Ft. Lena Meyer Landrut.” Innovation: The Most Personal and David Daub Photography, David Daub, G “Bars” Icon made by Good Ware on Responsive Sport Retail Experience.” daviddaub.com/nike-lena-meyer- https://www.flaticon.com/free-icon/ Business Wire, Berkshire Hathaway, landrut/. bars_547166. 14 Nov. 2018, www.businesswire.com/ news/home/20181114005859/en/Nike- AA Daub, David. “Nike Tech Pack Editorial H “Theater Masks” Icon made by Freepik Opens-Nike-NYC-House-Innovation- Ft. Stefanie Giesinger.” David Daub on https://www.flaticon.com/free-icon/ Personal. Photography, David Daub, daviddaub. theater-masks_1077683. com/nike-tech-pack/. Q “Sunglasses” Icon made by I “Brainstorm” Icon made by Eucalyp Smashicons on https://www.flaticon. AB Zahar, Mel. “Nike - City Fast.” Mel on https://www.flaticon.com/free-icon/ com/free-icon/sunglasses_1675013. Zahar, Mel Zahar, melzahar.com/NIKE- brainstorm_181361. CITY-FAST. R “Promotion” Icon made by Freepik J “Exchange” Icon made by Icongeek26 on https://www.flaticon.com/free-icon/ AC Maung, Sean. “Nike Cortez on https://www.flaticon.com/free-icon/ promotion_1077221. Campaign.” Sean Maung Photography, exchange_1641533. Sean Maung, seanmaung.com/. S “Online Shop” Icon made by monkik K Szenes, Jason. “Serena Williams on https://www.flaticon.com/free-icon/ AD Anderson, Nolis. “Nike Street.” Nolis v. Carina Witthoeft at the 2018 online-shop_993775. Anderson Photography, Nolis Anderson, U.S. Open.” The Washington Post, www.nolisanderson.com/nike. WP Company LLC, 30 Aug. 2018, T “Wrench” Icon made by Freepik on www.washingtonpost.com/news/ https://www.flaticon.com/free-icon/ early-lead/wp/2018/08/30/lets-talk- wrench_99801. about-serena-williamss-new-look-at- the-u-s-open/?noredirect=on&utm_ term=.19c676d30430.

FY18/19 Strategic Investment Report 33 This report is work and property of Alexis Newkirk, Angele Cherbonnier, Anteneh Lisan, Brogan Brasseaux and Emily Fisher. 2019. alexisnewkirk.com. ADNike Street.