Nike Predicts Sales Jump to $36 Million by 2017

In Industry News, What's New by Accessories Staff

Nike brand ambassador Serena Williams

Nike brand ambassador Serena Williams

Beaverton, OR—Nike Inc., the world’s largest athletic-wear maker, said Wednesday that it expects its annual sales to hit the $36 billion mark by the end of fiscal 2017, lead by increases in its apparel unit, including women’s.

“For Nike, no market is yet fully developed,” CEO Mark Parker told analysts in a presentation. “Nike is a growth company, and our results over the past 10 years have proven this true.”

One of the growth drivers is expected to come from apparel wholesale revenue which is expected to grow from $7.5 billion to $10 billion by 2017. Online sales are expected to quadruple to $2 billion from nearly $550 million.

Nike has seen its results anchored by growth in North America, its largest market, buoyed by sales of basketball and running-related gear. That’s helped it overcome revenue declines in China and mixed results in Europe.

Women’s Apparel, Footwear Sales to Rise

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.

Another area slated for dramatic growth is women’s footwear and apparel. Nike has introduced an array of products targeting women that has been well-received, said Heidi O’Neill, vice president of women’s training and fitness. Women’s revenue is expected to grow from $4 billion a year to $7 billion.

Nike’s Converse line is forecast to almost double to $3 billion in annual sales from $1.45 billion in fiscal 2013, the company said.

Nike also expects growth categories such as socks, which Nike has turned from a commodity business to one with cushioning, colors and prints that kids wear like “a social currency.”

Nike’s sales forecast equates to a compound annual sales growth rate of 9.2% over the next four years. Its annual sales growth rate was 10% in the past three years. In the past four quarters through Aug. 31, sales gained 7.1% to $25.8 billion while net income rose 26% to $2.7 billion.

Nike predicts it will have $30 billion in annual revenue by the end of its fiscal year 2015, hitting the high end of its own previous forecast for revenue of $28 billion to $30 billion.

Analysts had forecast Nike revenue would grow to $29.8 billion in the fiscal year that ends in May 2015, even after it sold its Cole Haan and Umbro units.

The report lifted shares of Nike in trading Wednesday. The shares have gained 37% this year compared with a 16% gain in the Standard & Poor’s 500 Index.