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Dividend Investing Ideas Center
Jared Cummans Jan 30, 2015
[Updated March 1, 2018 by Sam Bourgi] Nike Inc. (NKE ) is one of the most famous sports and apparel companies in the world. It has left its mark on some of the most famous athletes of all time, including Michael Jordan, Tiger Woods and Derek Jeter, among a number of other blockbuster names.
Nike is a member of the Dow Jones Industrial Average, putting it among the most popular stocks in the world. But for all of the attention the company has received over the years, there are still many things about Nike that are not common knowledge.
Below, we present seven interesting facts about Nike Inc. that you probably did not know:
“Just do it” has been a famous slogan that Nike has been using for many years now. But most people probably did not know that its origins stemmed from Gary Gilmore, who was executed for two murders in 1977. When asked for any final words prior to his execution, Gilmore simply replied, “Let’s do it.” Dan Wieden, the founder of Wieden+Kennedy advertising agency, used this quote as inspiration to launch the “Just Do It” campaign in 1988. Utilizing that campaign, Nike was able to greatly increase its market share in North America over the next decade.
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Footwear continues to be Nike’s biggest revenue generator. In fact, the segment’s percentage of total revenues has risen over the years. By the first quarter of 2018 (ending August 31, 2017), the segment accounted for 64% of global revenues. That’s up from around 58% in 2014. By comparison, apparel accounted for 30.9% of the total.
The Nike swoosh (picture right) is easily one of the most recognizable logos in the world. But the design of this famed symbol was commissioned in 1971 for a paltry $35. That paycheck would be worth approximately $200 in today’s dollars. It was designed by a graphic design student named Carolyn Davidson who attended Portland State University. Initially, Phil Knight (Nike founder) was not emphatic about the design, but he guessed that it would grow on him with time.
Knight eventually realized the value that the logo helped create, and in 1983, he gave Davidson a golden swoosh ring with an embedded diamond. He also presented her with an envelope with an undisclosed amount of NKE stock in an effort to repay her for her efforts on what was now a world-famous logo.
Although Nike plans to make a big push into the fast-growing women’s fitness segment, the company’s revenues are still largely driven by men. According to its most recent 10-K report, revenues generated from the “Men’s Training” category are more than double that of “Women’s Training.” Men’s Training accounts for 9%, while Women’s Training represents 4.4% of 2017 revenue.
Converse is perhaps most famous for its Chuck Taylor shoes, which have been around since 1917. But what many investors may not know or remember is that Nike acquired the company in 2003 for just over $300 million. This was after Converse fell on hard times and was forced to file for bankruptcy.
Hurley International is another popular brand that focuses on the surfing and skateboarding community. The company was acquired by Nike in 2002 for an undisclosed amount, though it has been able to maintain a relatively strong separation from its parent company over the years.
Emerging markets continue to be an important segment for Nike. In fiscal 2017, emerging markets accounted for nearly 12% of total revenues. Although that figure is down from earlier years, steady expansion in China and India, combined with the return of growth in regions like Latin America, suggest emerging markets will continue to play a big role in the company’s future.
The company made it a point to mention this fact in its 10-K. The reason this is significant is because it means that no one customer is the driving force behind Nike’s business and it is not overly reliant on a particular account. While a large account can help bolster a company, it can spell trouble when that account disappears and evaporates revenues with it.
In the case of its U.S. market, the top three customers combined accounted for 23% of sales in fiscal 2017. Internationally, the three biggest customers accounted for 12% of total non-U.S. sales. Nike has done a good job of diversifying its sales to ensure that its income stream is derived from a wide variety of customers.
As we have stated before, learning interesting facts about a particular company may not always have a direct impact on your investment, but they can help illustrate an important lesson. Always look under the hood of what you are investing in and be sure that you know how a security or company functions.
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