Credit: Shutterstock photoNike ( NKE ) is the world's largest manufacturer (by sales) of athletic footwear, apparel and equipment. The company traditionally competes with manufacturers like Adidas ( ADDYY ), Puma (ETR:PUM) and Reebok. Our price estimate for Nike's stock stands at $77.52 , which is about 6% below market price.
Overall footwear segment constitutes most value to Nike, with Nike and Converse brands together accounting for over 51% of the stock value. Below we compare these two brands in terms of what markets they serve, their market share and the value contribution to Nike.
Nike Branded Footwear - Caters to wider market and several sports
The footwear sold under Nike brand are designed for athletic purposes but large proportion is worn for casual and leisure purpose as well. The top selling footwear categories include training, running, basketball, sports-inspired casual shoes, kids shoes . Apart from these, the company also sells footwear in categories like aquatic activities, baseball, cheerleading, football, lacrosse, outdoor activities, skateboarding, tennis, volleyball, walking, wrestling , and other athletic and recreational uses. Nike not only sells shoes but also other footwear types like slippers and sandals. However, slippers and sandals constitute very low percentage of overall footwear sales.
We estimate that Nike branded shoes account for around 45% of Nike's stock value, and we forecast that the company has around 17% market share in 2010. This should climb to around 20% by the end of our forecast period.
Converse Branded Footwear - Multiple brands but focused market
Converse Inc. is Nike's wholly owned subsidiary that sells sports footwear and has built its reputation as America's original sports company. The subsidiary was acquired by Nike in 2003 and since then it has successfully re-established its market. The subsidiary has been associated with famous shoe brands like Chuck Taylor, Jack Purcell, One Star, etc. catering to sports like basketball and tennis. The charts above show a quick comparison of how Nike brand stands against Converse and show market share and value contribution of each of them. So while Converse is an established and well known brand it adds little to Nike right now.
We estimate that Converse branded shoes account for around 6% of Nike's stock value, and we forecast that the brand has less than 2% market share in 2010. This should climb to around 3% by the end of our forecast period.
You can seethe complete $77.52 Trefis price estimate for Nike's stock here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
