Will Nike's Footwear Market Share Keep Growing?

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Widening product lines coupled with strong marketing and innovation has contributed to Nike's ( NKE ) rising market share in the global footwear market. Its share has increased from almost 14% in 2006 to around 16% in 2009, and we expect this trend to continue over our forecast period.

Nike competes with Sketchers ( SKX ), Adidas AG ( ADS ), Steven Madden ( SHOO ) and K-Swiss ( KSWS ) in the global footwear market.

According to our estimates, Nike branded footwear constitutes around 44% of Nike's stock; hence the stock is significantly impacted by the global footwear market share. If Nike's footwear share reaches 21% in coming years instead of the 19% that we currently forecast, this could create an upside of 5% to our current price forecast.

We currently have a Trefis price estimate of $68.63 for Nike's stock , which is about 20% below the current market price.

Innovation is Key for Nike

Nike is known for its innovative products. It spends a significant amount of time on shoe development and design. It also collaborates with other companies in order to design new products. For example, it worked with Apple to create a shoe with space in it to accommodate a chip that communicates data on speed and distance covered to the runner's iPod. This resonates with users and keeps its offerings fresh.  Given the proliferation of iPods and other mobile devices that runners often use during exercise, incorporating these into Nike's products shows an innovative product design.

Strong Marketing Campaigns

Big brands like Nike capitalize on large-scale sporting events like tennis and soccer tournaments. Effective advertising campaigns during these sporting seasons trigger market share growth.

In recent news, the National Football League (NFL) announced that it's splitting the key part of its apparel licensing between two companies: Nike and New Era. This five-year multi-million dollar deal will be effective April 2012. Nike also has a strong licensing programs with leading college and universities in the US, which popularizes its brand at the local level.

Member Forecasts

Trefis members expect Nike's global footwear market share will increase from 17% in 2010 to 21% during the forecast period compared to the Trefis estimate of an increase from 16% in 2010 to almost 19% during the same period. See the modifiable chart above to make your own estimates.

Our complete analysis for NIKE's stock is here .



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas , Stocks , US Markets

Referenced Stocks: ADS , KSWS , NKE , SHOO , SKX

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