Widening product lines coupled with strong marketing and
innovation has contributed to Nike's (
) 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 (
), Adidas AG (
), Steven Madden (
) and K-Swiss (
) 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
, 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
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.
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.
complete analysis for NIKE's stock is here