New York–Athletic footwear and activewear brand Nike is targeting revenues of $27 billion by the end of fiscal 2015, led by growth in emerging markets and its affiliate brands as well as hundreds of new Nike stores.
At the company’s investor meeting in New York on Wednesday, president and ceo Mark Parker claimed Nike had “never been more inspired, innovative and aligned to achieve our goals.”
The targets equate to high single-digit revenue growth per year, as well as mid-teens earnings per share growth and a 25% return on invested capital.Much of the planned growth continues to center on the Nike brand, which currently accounts for about 85% of company revenues.
Nike is aiming to grow revenues in mature markets like North America and Western Europe in the mid-single digits, while emerging markets like China and central and eastern Europe have a low double-digit revenue growth target. In fact, more than 70% of future growth will come from outside North America as middle class consumers continue to grow in Asia and other emerging markets.
The company plans to open 250 to 300 new Nike-branded stores around the world in the next five years, spending up to $600 million over the same period on new stores and retail support. But wholesale revenues will continue to dominate, and are expected to account for more than 80% of Nike’s business by 2015.
Growth in Affiliate Brands
Subsidiary businesses, such as Cole Haan, Converse, Hurley International, Nike Golf and Umbro, are also slated for bullish growth targets, adding up to $2 billion of revenue by the end of fiscal 2015.
“Think of Converse as an inspired-by-basketball brand. It drifts into other areas–into music, rock and roll–where Nike wouldn’t go,” Eunan McLaughlin, president of Nike’s affiliates unit told investors. Nike only owns and manages Converse in the United States, but earnings would increase as Nike assumes control in China and the U.K.