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Nike Financial Performance

In: Business and Management

Submitted By hunnyb12
Words 1165
Pages 5
Nike sells athletic footwear and apparel; its revenue in FY 2008 totaled over $18.6 billion, easily the most in its market. Nike has a global reach, with 34% of its total 2008 revenue coming from the United States and EMEA (Europe, the Middle East, Africa) accounting for an additional 30%. In 2008 for example, Nike's advertising costs equaled 12.4% of its revenue. The marketing takes the form of traditional television and print advertisement, but especially focuses on celebrity athlete endorsements; Nike sponsors marquee athletes in basketball, golf, soccer, and tennis. In the summer of 2008, Nike's extensive advertising efforts in the Beijing 2008 Olympics and European Football Championship led to a 15% surge in the company's 2008 SGA expenses.
With $18.6 billion in revenue in 2008, Nike was the industry leader. Since 2001, Nike has captured about 35% of the global market. It is largest in the US, with recent market shares in the region of 38%. Nike's scale advantage principally manifests itself in low advertising costs. Scale reduces advertising costs because large brands are inherently recognizable, and because, with a large distribution network, a dollar spent on advertising improves sales in many stores. In 2008, Nike spent $2.8 billion on advertising, 12.4% of revenue. During Q1 2009, Nike's advertising expenses jumped 39% because of higher marketing efforts surrounding the Olympics.
With U.S. retail sales and consumption slowing in 2008, Nike has focused on its international portfolio and pursues growth opportunities in emerging markets. In 2008, Nike's revenue in its EMEA and Asia Pacific regions led the company's growth with a 19% and 26% increase in revenue, respectively. Meanwhile, U.S. sales revenue for Nike has been comparatively flat, growing only 4% in 2008, with a 1% decrease in Q2 2009.
Managers for Nike are creating value for shareholders by...

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