Nike CEO Mark Parker Says Revenue Will Grow To $36B By FY '17 Despite Lag In China
Nike CEO Mark Parker's revenue forecast of $30B by FY '15 and $36B by FY '17 was the "top announcement among several key predictions made" yesterday during the company's Investor Day, according to Allan Brettman of the Portland OREGONIAN. Nike VP & GM of Global Basketball Craig Zanon said that with "footwear and apparel from Nike, Jordan Brand and Converse, Nike is the clear leader worldwide in basketball." He added that socks "designed specifically for basketball" earned $100M a year in revenue in the U.S. and is "expected to grow." With Nike's marketing backing, the product also is "expected to be popular globally." Meanwhile, Nike VP & GM/Women's Training & Fitness Heidi O'Neill said that the company has "introduced an array of products targeting women that has been well-received." Women's revenue is expected to grow from $4B a year to $7B. In other predictions targeting '17, apparel wholesale revenue is expected to grow from $7.5B to $10B, and "direct to consumer e-commerce business is expected to quadruple -- from nearly" $550M to $2B. While the company "will not hit its revenue targets in the Greater China region as quickly as it forecast in a similar meeting two years ago, company executives detailed plans to reignite sales in that part of the world" (Portland OREGONIAN, 10/10). Nike's FY '13 revenue was reported at $25.3B in late June (THE DAILY). Parker said, "We've been growing our women's business faster than we have our men's business." Nike VP & GM of Global Categories Jayme Martin "staked out Nike's ground in the world of soccer." He said that when the brand "entered this category it was not well-received." Martin said the popular reception was, "We didn't belong. We didn't have the heritage. We didn't know the game ... well, we lead the market now" (OREGONLIVE.com, 10/9).
FOCUSING ON CHINA: Nike execs said that the company is "recalibrating its approach to consumers" in China, and has a plan on "how to reignite what once was double-digit growth." Nike CFO Don Blair "rejected the idea that the company had miscalculated China." He said, "We set ourselves a goal and we won't make the goal on the original timetable. But we're absolutely confident we will make that goal in time." Blair added, "In China, we have a market that's evolving, the consumers' expectations are changing and we're evolving our business. We've had a period and we will have some time on resetting our revenues. We've said this year we'll be flat but we're absolutely convinced we will grow again in China and we'll grow at an accelerated rate" (OREGONLIVE.com, 10/9). At presstime, shares of Nike were trading at $73.13 per share, up 3.2% from the close of trading yesterday (THE DAILY).
PLAN OF ATTACK: Parker said of Nike's competition, "We thrive on competition, that's what we' all about. … We actually compete with ourselves in a sense and we're looking at our potential and what we can be, not just how much better we might be than the competitors. So that's really the zone that we're in and as a leader that's where we should be" ("Closing Bell With Maria Bartiromo," CNBC, 10/9).