For an athletic apparel and sporting-goods manufacturer that is as dominant on a global scale as Nike (NKE 0.61%), growth cannot be derived solely from geographic expansion. In fact, one of Nike's greatest strengths, its massive global footprint, has also become part of the reason the company's growth is slowing somewhat.
However, Nike management remains committed to innovating in various product categories. This is extremely important because innovation, which is at the heart of almost everything Nike does, has already driven massive success for the company before. Judging by Nike's most recent and upcoming product introductions, innovation will continue to be a key growth driver in the future as well.
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Innovative matters
Nike President and Chief Executive Officer Mark Parker explained in the company's most recent earnings call, "While the Nike portfolio is diverse, there is a common theme. It's powered by innovation. We don't innovate just for the sake of change. We do it with a clear purpose and that's to help athletes reach their full potential."
For Nike, which has already cemented its place atop the athletic-footwear market, innovation is a way for the company to remind consumers that it is capable of creating great new products. It is also a way for Nike to remind industry competitors that management is not stepping off the throttle any time soon.
A perfect example of the true power of innovation is Nike's smaller competitor Under Armour (UAA 1.87%). For the apparel, footwear, and accessories maker, innovation is the major reason why consumers choose to purchase its products over those of competitors.
For instance, Under Armour is now widely recognized as the leader in performance apparel. The company's signature temperature system helps athletes choose gear designed specifically for cold, warm, and neutral settings: ColdGear is designed for use in 55-degree temperatures and below, while Heatgear is designed for use in 75-degree temperatures and above. AllSeasonGear is designed for use in the 55-75-degree temperature range.
This simple yet effective marketing strategy means that consumers don't have to think much about which performance gear to purchase in any season, which makes purchasing products quicker and easier.
New innovative products
In the recently ended quarter, Nike introduced several new products that showed off the company's innovative capabilities. The first was its new football shoe, the Vapor Carbon Elite Cleat; it was designed via a state-of-the-art 3-D design process just in time for the Super Bowl in the New York area. The cleat allows football players greater speed and quicker cuts.
A second innovation was debuted at the 2014 Winter Olympics in Sochi, Russia. Both the men's and women's Canadian ice hockey teams wore Nike's newest jerseys on their way to gold medals. The jerseys were super lightweight thanks to the company's built-in Nike Flywire technology.
Finally, the most recent innovative design for Nike has been its eagerly anticipated Magista soccer boot, which was revealed a few weeks ago ahead of the 2014 FIFA World Cup in Brazil. The boot, which Nike claims will "change the game," was developed with the help of professional soccer athletes; it features revolutionary enhancements like Nike Flyknit, 360-degree rotational traction, and a sock-like fit.
With preorders for Magista set to begin on April 29, and with Nike ramping up fourth-quarter investments to promote the boot ahead of and during the World Cup, the stage is set for a great end to Nike's fiscal 2014.
Bottom line
Although definitely a more mature company than smaller competitor Under Armour, Nike has innovative prowess that's no less impressive. With literally game-changing product designs, Nike should continue to reward investors in the long term thanks to management's unwavering commitment to making athletes perform better the world over.
