Nike Inc. is looking to add 40 percent to its sales in the next five years, taking it to $27 billion from $19.2 billion, and apparel is a key component of the plan.
This story first appeared in the May 6, 2010 issue of WWD. Subscribe Today.
At the athletic apparel and footwear giant’s first analyst meeting in three years in New York Wednesday, Nike president and chief executive officer Mark Parker said, “We’re a great footwear company, and I think we’re a pretty good apparel company. I’ve made it clear that we’re going to be a great apparel company, too, because apparel has the potential to fuel growth in every Nike brand category, in every business in the Nike Inc. portfolio.
“It certainly represents one of Nike Inc.’s top growth priorities,” he said.
International opportunities at its Hurley, Converse, Cole Haan and Umbro brands will factor heavily in Nike’s growth, Parker said, adding sales at Converse alone are expected to double over the next five years.
Converse, which generated about $300 million in sales at the time of its acquisition by Nike in 2003, raked in almost $1 billion in sales last year, excluding revenue from licensed businesses.
In order to continue the momentum at Converse and at its other brands, Nike plans to buy back some of its overseas licenses and to grow internationally. Firms including Polo Ralph Lauren Corp. and Tommy Hilfiger have acquired all or part of licensees as a means of spurring global growth in recent years.
Parker alluded to expanding in markets such as China, India and Brazil, where the middle class is rapidly developing.
The ceo said the Beaverton, Ore.-based company anticipates amassing $12 billion in free cash flow from operations and repurchasing more than $5 billion in shares.
During a bad day on Wall Street overall, shares of Nike slid 2.8 percent to $75.21 at the end of trading Wednesday.
“Our power is quantifiable and our potential continues to grow,” Parker said. “Innovation and collaboration is really the way forward.”