Nike, Inc. (NKE) was founded in 1964 by Phil Knight and is the largest seller of athletic footwear and apparel in the world. Nike has over $36 billion in world-wide sales and has three primary segments: Footwear (65%), Apparel (31%), and Equipment (4%).

Nike has several different product categories with the largest being sportswear (33%), running (17%), Jordan brand (9%), training, football, basketball, and other.

Over the last few years, Nike has shifted their strategy from having their products being widely distributed through wholesalers to selling their products through Nike owned retails stores, the company website, and retail accounts. A great example of Nike’s strategy can be seen at Dick’s Sporting Goods in the dedicated Nike section called Nike Fieldhouse.

In 2014, North American sales growth peaked and has been slowing until recently. Part of the pick-up in growth has been attributable to a shift from wholesale sales to more limited retail partners and direct to consumer channels. In 2012, wholesale accounts represented almost 83% of NA sales compared to only 69% today.

The shift towards direct to the consumer has been facilitated by Nike’s strong website (or Nike By You) that allows customers to create custom shoes for running, soccer, and basketball. Supply chain and technological improvements allow Nike to deliver custom shoes much more quickly than their competitors, while also having better gross margins.

One key strength for Nike is their international sales exposure, which has been gradually shifting away from North America and today represents almost 57% of sales. Strong Chinese sales growth of high teens to low 20 percent over the last few years has contributed meaningfully to Nike’s top and bottom-line.

Over the last few years, the strategy shift away from wholesale sales and towards higher margin e-commerce sales has started to lift profit and Nike’s stock price has reacted too.

As with any retailer, investors should always be careful of how fickle consumers can be of recent trends.


Beese Fulmer Private Wealth Management was founded in 1980 and is one of Stark County’s oldest and largest investment management firms. The company serves high-net-worth individuals, families, and non-profits, and has been ranked as one of the largest money managers in Northeast Ohio.