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Financial Statement Analysis of Nike Inc.

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Added on  2023-06-13

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This article provides a detailed analysis of the financial statement of Nike Inc. including its role in the international market, competitors, current market conditions, and analysis report of five years performance. The article also includes a ratio analysis of the company's financial performance in terms of activities, solvency, liquidity, and profitability.

Financial Statement Analysis of Nike Inc.

   Added on 2023-06-13

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Financial Statement Analysis of Nike Inc._1
Nike Inc., is an international company that specializes in the designing, marketing, innovating,
developing and selling of footwear, related accessories & equipments, apparel and such other
services for the athletic purposes. It was incorporated in 1969 on 8th of September. The countries
where it has its operating divisions are North America, Europe, Greater China, Japan and such
other emerging counties. The brands officially sold under the company's profile include the Nike
Brand, Jordan Brand, Hurley and Converse. The company sells its branded products through the
world through retail service providers or stores, internet shopping websites and with all these are
included a number of independent distributors and intermediaries throughout the world (Adelaja,
2015) .
The Company recently has categorized its offers & products of NIKE brand into nine parts :
Nike basketball, Soccer (football), training of Men's training, Women's training, the Jordan
Brand, Running, Sportswear, Golf and Action Sports. The company is engaged in other kinds of
products that are used for other athletic uses as well as other recreational activities such as tennis,
volleyball, cricket, wrestling, lacrosse, walking and a number of other outdoor activities. In fact,
the company also produces designs for kids as well. The athletic footwear produced by the
company are used majorly for the athletic activities. Such products are also available in
purchased for casual purposes or leisure purposes (Bierman & Smidt, 2010) .
Financial Statement Analysis of Nike Inc._2
The reports say that no company other than Nike spends so much money on the production &
manufacturer of sports products. After the first post release quarter results of 2018, with 12
months sales of $34.35 billion, the world's largest footwear and clothing company is Nike. Nike
gains its 55% revenue from the international markets and the footwear brands forms 60% of its
total sales. As of now, Nike has obtained the sixteenth position in Forbes's list of the world's
most valuable brands as its brand value approximately equals to $29.6 billion. Thr market
capitalization of Nike is $86.45 billion (September 2017). The quarter one results are reported on
September 26 that showed a 0.1% Yoy rise equaling to $9.07 billion in sales. However, it is
considered that the current quarter results of the company were the slowest growing quarter in
the last seven years. The Wall Street expectations weren't fulfilled as there was a shortage of $18
millions (Dayananda, Irons, Harrison, Herbohn, & Rowland, 2008
Recently, the Jordan brand of Nike was taken over by Adidas, who obtained a second position in
the footwear market of US. The recently released reports says that Adidas is constituting 11.3%
of the market share of US with respect to market share of 9.5% of Jordan Brand during the initial
eight months of 2017. However, the US market was dominated by the Nike brand with a market
share of 37%. Nike's revenue in the country North America during that quarter fell 3% which is
basically the first decline in sales in last four years. However, Nike still own the largest market in
North America as it owns approximately 43% of its total sales (Menifield, 2014) . Even after the
declining of revenue by 3% in North America, International market still showed strong
Nike's one of the key strategy is having an emotional attachment with its customers who wants to
have a healthy life by selling lifestyle instilled with feelings of finding one owns greatness. The
emotional benefits relates to a customer's desire of having good vibes while jogging and feeling
fresh & healthy. (Peterson & Fabozzi, 2012) .
The top three competitors of Nike are Adidas, Reebok and Under Armor. Let is discuss the
reasons of such competitiveness among these brands (McLaney & Adril, 2016):
One of the key reasons for Adidas being a competitor is it operates through both Adidas
brand and forms a very strong subsidiary at Reebok. It competes in terms of footwear,
Financial Statement Analysis of Nike Inc._3
clothing and equipments. Also, the customers are attracted towards it and have a string
liking for adidas products.
Reebok is well known for its cool designs in the sports footwear and is a supplier of kits
of national & international level games like Cricket, Football and other activities.
(Rivenbark, Vogt, & Marlowe, 2009)
Under Armour has an attractive sales market in US with an attractive brand valuation. It
is to be noted that it is being assigned as the official provider of uniforms for American
football, American Soccer as well as basketball.
Other competitors include Puma, Fila, Converse, K-Swiss, New Balance and Asics.
Financial Statement Analysis of Nike Inc._4

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