NIKE, Inc. (from Hoover's Company Profile)

NIKE, Inc.

OVERVIEW

NIKE, the world's biggest shoe company, has a reputation for fancy footwork, especially in the arena of marketing. With both Forrest Gump and Michael Jordan sporting NIKE's athletic shoes, NIKE's appeal is wide ranging. The shoe giant still holds nearly 37% of the US market, a giant lead over #2 Reebok, which has 20.5%, and #3 Fila, with only 5.1%.

NIKE - a powerhouse in the world of sports, the designer and international marketer of athletic shoes, casual footwear, apparel, and accessories - is looking for new growth opportunities. Faced with a softening US market for its traditional athletic products, in recent years NIKE has diversified its products and expanded its international operations. NIKE bought capmaker Sports Specialties in 1994, and in 1995 it entered the in-line skates market by purchasing Canstar Sports, the world's largest hockey equipment maker, for $395 million. The company acquired 100% of its subsidiaries in Japan and Korea in 1994. It also set up a joint venture in Argentina.

NIKE founder, chairman, and owner Phil Knight holds approximately 35% of the company's stock.

WHEN

In 1958 Phil Knight, an undergraduate business student at the University of Oregon and a good miler, often spoke with his coach Bill Bowerman about the lack of a good American running shoe. Bowerman, resolving to create a better shoe, sent an original design to several leading sporting goods companies. Turned down by all of them, Bowerman decided to make the shoe himself.

In 1964 Knight and Bowerman formed their own athletic shoe company, Blue Ribbon Sports, each putting up $300 for the first order of 300 pairs of shoes, manufactured by Onitsuka Tiger, a Japanese shoe manufacturer. They stored the shoes in the basement of Knight's father's house and sold them out of cars at track meets.

In 1968 the 2 men formed NIKE, named for the Greek goddess of victory invoked by the legendary runner from Marathon. The NIKE "swoosh" logo was designed by a graduate student named Carolyn Davidson, who was paid $35. In 1972 NIKE broke with Onitsuka in a dispute over distribution rights.

At the 1972 Olympic Trials in Eugene, Oregon, Knight and Bowerman persuaded some of the marathoners to wear NIKE shoes. When some of these runners placed, the 2 men quickly advertised that NIKEs were worn by "four of the top seven finishers."

In 1975 Bowerman had an idea for a new sole, which he tested by stuffing a piece of rubber into a waffle iron. The result was the waffle sole, which NIKE added to its running shoes. When running became popular in the 1970s, NIKE improved its line of running shoes to appeal to the new market.

When enthusiasm for running faded, rival Reebok forged ahead with its aerobic lines, and NIKE responded with shoes for other sports. NIKE introduced Air Jordan (a basketball shoe named for basketball star Michael Jordan) in 1985, the Cross Trainer in 1987, the "Just Do It" slogan in 1988, Air Pressure (basketball shoes with inflatable soles) in 1989, and Aqua Sock (water shoes) in 1990. In the meantime NIKE bought Cole Haan (dress shoes, 1988).

With Air Raid, the company in 1992 introduced yet another successful athletic shoe. Also in 1992 NIKE and competitor Avia came to undisclosed terms in a patent infringement lawsuit. Avia had accused NIKE of swiping a design for shoe cushioning, and NIKE had responded with similar charges. That same year the firm opened the first NIKE Concept Shop, a 2,000-square-foot "store within a store" at Macy's in San Francisco. The company also launched NIKE TOWN, a concept retail store that combines innovative products with endorsements and image selling by top athletes, in Portland, Oregon.

In 1993 chief NIKE icon Jordan, having led the Chicago Bulls to their 3rd consecutive NBA championship, retired from professional basketball to try his hand at baseball. Handing the company an unexpected boost, Jordan (whose NIKE ads outperformed Shaquille O'Neal's Pepsi ads by 6-to-1, according to Sports Marketing Letter's poll of 3,000 readers) returned to play professional basketball in 1995 and starred in a new series of NIKE ads.

By 1995 the 2nd NIKE TOWN, in Chicago, was the city's #1 retail tourist attraction. NIKE plans to open more NIKE TOWNs in several US cities, including Boston, New York, Seattle, and San Francisco. In 1995 NIKE received a license to place its logo on NFL uniforms.

WHO

Chairman and CEO: Philip H. Knight, age 56, $1,652,083 pay
VC: Richard K. Donahue, age 67
Deputy Chairman: William J. Bowerman, age 83
President and COO: Thomas E. Clarke, age 43, $1,140,625 pay
VP and General Manager, Consumer Product Marketing: Mark G. Parker, age 38, $780,000 pay
VP and General Manager, Sports and Fitness: Harry C. Carsh, age 55, $568,250 pay
VP Production: David B. Taylor, $542,292 pay
VP and General Manager, International Division: David Kottkamp, age 52
VP Law and Corporate Affairs and Assistant Secretary: Lindsay D. Stewart, age 47
VP and CFO: Robert S. Falcone, age 47
Manager Human Resources: Nancy Klempowski
Auditors: Price Waterhouse LLP

WHERE

HQ: One Bowerman Dr., Beaverton, OR 97005-6453
Phone: 503-671-6453
Fax: 503-671-6300

NIKE sells its products in 82 countries, operates 61 retail outlets, and has administrative offices in Austria, Canada, Hong Kong, the Netherlands, and the US. 1995 1995 SALES OPERATING INCOME $ mil. % of total $ mil. % of total US 2,998 63 502 70 Europe 980 20 114 16 Asia/Pacific 516 11 64 9 Other regions 267 6 38 5 Adjustments - - (68) - Total 4,761 100 650 100

WHAT

1995 SALES $ mil. % of total Domestic footwear 2,309 48 International footwear 1,244 26 International apparel 473 10 Domestic apparel 424 9 Other 311 7 Total 4,761 100 Athletic Shoes Aquatic Baseball Basketball Bicycling Cheerleading Fitness Football Golf Hockey Roller skates Running Soccer Tennis Volleyball Wrestling Athletic Wear Accessories Athletic bags Caps Fitness wear Gloves Headwear Jackets Leotards Pants Running clothes Shirts Shorts Skirts Socks Vests Uniforms Unitards Selected Subsidiaries Canstar Sports (hockey equipment and in-line skates) Cole Haan Holdings Inc. (footwear and accessories) Sports Specialties, Corp. (headwear and licensed team logos) Tetra Plastics, Inc. (plastic footwear components)

KEY COMPETITORS

Adidas Converse Deckers Outdoor Fila First Team The Gap L.A. Gear Lands' End Levi Strauss The Limited Nautica New Balance Puma Reebok Ryka Rollerblade Russell Corp. Stride Rite Timberland Variflex V. F. Wolverine World Wide symbol: NKE
Fiscal year ends: May 31

HOW MUCH

1986 1987 1988 Sales ($ mil.) 1,069 877 1,203 Net income ($ mil.) 59 36 102 Income as % of sales 5.5% 4.1% 8.5% Earnings per share ($) 0.39 0.24 0.68 Stock price - high ($) 5.03 6.13 8.50 Stock price - low ($) 2.66 2.91 4.41 Stock price - close ($) 2.94 4.88 6.63 P/E - high 13 26 13 P/E - low 7 12 7 Dividends per share ($) 0.10 0.10 0.10 Book value per share ($) 2.10 2.23 2.77 Employees 3,400 3,000 3,450 1989 1990 1991 Sales ($ mil.) 1,711 2,235 3,004 Net income ($ mil.) 167 243 287 Income as % of sales 9.8% 10.9% 9.6% Earnings per share ($) 1.12 1.61 1.89 Stock price - high ($) 17.00 23.97 37.88 Stock price - low ($) 6.47 12.00 17.56 Stock price - close ($) 13.31 20.13 36.19 P/E - high 15 15 20 P/E - low 6 8 9 Dividends per share ($) 0.13 0.18 0.24 Book value per share ($) 3.77 5.26 6.86 Employees 4,700 3,400 4,515 1992 1993 1994 1995 Sales ($ mil.) 3,405 3,931 3,790 4,761 Net income ($ mil.) 329 365 299 400 Income as % of sales 9.7% 9.3% 7.9% 8.4% Earnings per share ($) 2.15 2.37 1.98 2.72 Stock price - high ($) 45.13 44.63 38.25 70.38 Stock price - low ($) 27.50 21.56 23.13 34.38 Stock price - close ($) 41.50 23.13 37.31 69.63 P/E - high 21 19 19 26 P/E - low 13 9 12 13 Dividends per share ($) 0.29 0.35 0.40 0.45 Book value per share ($) 8.82 10.85 11.89 13.75 Employees 7,800 9,600 9,500 14,240 1995 YEAR-END: Debt ratio: 18.3% Return on equity: 21.6% Cash (mil.): $216 Current ratio: 1.85 Long-term debt (mil.): $11 No. of shares (mil.): 143 Dividends Yield: 3.9% Payout: 16.5% Market value (mil.): $9,949

Hoover's Company Profile Database, Copyright (C), 1996, Hoover's, Inc., Austin, Tx.

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