NEW YORK – Nike Inc. expects to boost its volume more than 50% in the next five years, and three-quarters of the growth will come from an increasingly consumer-centric Nike brand.
Company executives laid out their vision of a $23 billion company by fiscal 2011, up from $15 billion last year, in a conference with investors and analysts Tuesday. The Nike brand is the key to its plans, with projected growth of about $6 billion. As previously announced, footwear, apparel and equipment revenues are expected to be enhanced by a focus on six core categories: running, basketball, football (soccer), women’s fitness, men’s training and sport culture. These areas alone are expected to generate about 75% of the Nike brand’s growth, or about $4.5 billion in new revenue.
“The ability to connect with consumers is the single most important competitive advantage in our industry today,” said Mark Parker, president and chief executive of the Beaverton, Oregon-based sports giant. “Nobody does this better than Nike.”
The affiliate brands group – including Cole Haan, Converse, Exeter Brands Group, Hurley International, Nike Bauer Hockey and Nike Golf – currently boasts sales of nearly $2 billion, the company said, and collectively has “more than doubled” its revenue and pretax income contribution to corporate results since 2001.
Although growth for the Nike brand will continue to be concentrated in the U.S., U.K., Japan and China, now responsible for 61% of brand revenues, the company expects to “invest aggressively” in Russia, India and Brazil, each of which it believes can be a billion-dollar market for the brand.
Nike expects its business to remain heavily reliant on wholesale operations – sales to retailers are anticipated to account for 80% of 2011 sales – but it sees direct-to-consumer volume rising to 15% of revenues in 2011 from 12% now. Nike plans 100 new Nike stores worldwide in the next three years, with as many as half slated for the US. The increased retail presence is designed “to elevate the brand experience, position the Nike brand in the world’s premium shopping locations and test innovative retail concepts that can serve as a growth catalyst for the specialty athletic retail industry,” the company said.
“Becoming a better retailer will help us be a better wholesale partner,” Parker commented.