Nike’s Impressive Growth Makes Growth Companies Green With Envy

Despite being a mature company, Nike has been posting impressive growth of late, and is expected to continue increasing its global market share.

Jan 28, 2014 at 1:27PM

Nike (NYSE:NKE) is globally revered as a perennially cool sports-gear maker, whose popularity and brand gravitas never seem to wane. The sports-apparel maker is also huge, with only Adidas standing above it in the industry in terms of revenue and market cap. Nike has been growing at a sweltering pace that belies its huge size. The company grew its sales at a very impressive compound annual growth rate, or CAGR, of 12.3% between 2010-2012, which is no mean feat for a company of its size--especially for one that has been around for half a century.

Although Lululemon Athletica (NASDAQ:LULU) and Under Armour (NYSE:UA) have both been growing at an even faster clip over the same period, the two are still in the growth phase of their life cycles, and their overall revenues pale in comparison to Nike's or Adidas'.


Fiscal 2010

Fiscal 2011

Fiscal 2012

CAGR (2010-2012)

Adidas (includes Reebok)

$7,023 (€5,380)

$7,484 (€5,733)

$8,211 (€6,290)








$1,229 (€941.3)

$1,352 (€1,035.6)

$1,504 (€1,151.9)


Under Armour





Lululemon Athletica






$427 (¥42,576)

$439 (¥43,685)

$470 (¥46,838)


Increasing global market share
Nike has been showing strong growth in the North American market and has been equally impressive in emerging markets. Although the company's sales in China have slackened in the recent past, the company has forecast significantly improved future orders, indicating that its sales there will pick up once again.

The 5% decline in future orders from Western Europe is not a sign of sluggish demand there but rather a reflection of difficult year-over-year comparisons since the previous year's sales were mainly driven by the Olympics and UEFA Euro Championships.

Breakdown of Nike's apparel sales by region


% of Nike Apparel Revenues by Region (Fiscal 2012)

Annual Growth In Apparel Revenues (excluding currency impact)

Future Orders Growth (excluding currency impact)

Fiscal 2012

First nine months of fiscal 2013

North America





Western Europe





Greater China





Emerging Markets





Central & Eastern Europe










But perhaps the best past of Nike's success story is that the company has been steadily growing its share of the global sports-apparel market, from 3.9% in 2007 to 4.9% in 2012. The company is expected to continue this run and will command a 6.5% share of the global market by 2019. You would normally expect smaller and more nimble upstarts such as Lululemon and Under Armour to be slowly gnawing market share from behemoths such as Nike or Adidas, but Nike is not your average large company.

Big but still highly innovative
Nike was recently voted by Fast Company as the world's most innovative company in 2013, which is a rare achievement for a large, built-out company. Thomas J. Peters and Robert H. Waterman co-authored the popular business book "In Search of Excellence" in the early eighties. In their book, they expounded at length why small companies frequently out-innovate their larger counterparts by a huge 4:1 margin.

Well, that might have rung true in the eighties. But the tables have now turned, and the advent of globalization and e-commerce have significantly improved the odds of big companies innovating just as efficiently as small ones. Large but highly innovative companies such as Nike are proving that big does not necessarily mean cumbersome or unwieldy.

Nike produced not one but two fabulous products in 2013 that turned out to be huge hits -- the ultra-light Flyknit Racer Shoes and the much-publicized Fuel Band. Nike's kind of innovation is not simply all about adding bells and whistles to existing products but is of the truly disruptive type that is more commonly associated with start-ups.

Nike has been thriving under the tutelage of CEO Mark Parker, and has seen both its top line and bottom line improve by a huge margin since 2006 when he took the helm. The company's revenue has improved by 60%, while its profits have shot up 57% between 2006 -2012.

Decent valuation
Nike shares carry a very fair valuation compared to peers Lululemon, Under Armour, and Columbia Sportswear (NASDAQ:COLM).

Lululemon shares have tanked by a huge margin ever since its management lowered its full-year revenue and earnings guidance. Its valuation after the sell-off is now a lot more attractive and comparable to Nike's. Despite the lowered guidance, Lululemon is expected to still continue growing both its top line and bottom line at an impressive pace in 2014.




Under Armour

Revenue Growth 2014




EPS Growth 2014




Under Armour stands out as being extremely pricey, and this could be a problem. Lululemon's expected growth for 2014 is not far behind Under Armour's, yet it's trading at a forward P/E ratio of 25 compared to Under Armour's stratospheric 60.

Under Armour lacks its own patents, which are mostly owned by its suppliers. The company is quite vulnerable to facing increasing competition from other sports- apparel manufacturers once these patents expire.

Under Armour also relies heavily on cotton for its specialty products. The huge 55% rise in cotton prices in 2013 could mean a squeezed profit margin for the business in the coming years. These potential headwinds could slow down growth for Under Armour and make it hard to justify that kind of valuation.

Meanwhile, Columbia Sportswear is still trading at a reasonable valuation, despite its shares having hit 52-week highs. Although the company is the smallest of the bunch, it has a huge global presence with renowned brands such as Montrail, Outdry, Mountain Hardwear, Sorel, and Columbia. These brands are available in 100 countries around the world. Columbia shares yield 1.5%, and the company hiked its dividend by 14% in the third-quarter of 2013.

Bottom line
Although Lululemon and Under Armour are recognized as the global leaders in the specialty-sports-apparel industry, Nike has of late been making some plays here. Meanwhile, the secular trend of growing fitness consciousness, rapidly rising income levels in emerging economies, and the increasing adoption of sportswear by women around the world will ensure Nike continues to blaze the growth trail in the future.

Looking for other great growth picks?
They said it couldn't be done. But David Gardner has proved them wrong time, and time, and time again with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently one of his favorite stocks became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen six picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.


Fool contributor Joseph Gacinga has no position in any stocks mentioned. The Motley Fool recommends Lululemon Athletica, Nike, and Under Armour. The Motley Fool owns shares of Nike and Under Armour. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers