As a business that provides the clothing and footwear for athletes to compete at the highest level, Nike (NKE 0.19%) has certainly been a winning investment in the past.

In the last 30 years, the top footwear and apparel stock has turned a $10,000 initial investment into a whopping $962,000 today (as of Feb. 14), including dividends. A similar investment in the S&P 500 would be worth $189,000 today.

Let's take a look at Nike's history to figure out what factors led to such an impressive performance. For prospective investors, it's best to view things today with a fresh perspective.

Nike's history of winning

Without a doubt, Nike's most important quality is its strong brand. The company was founded in 1964, and it has taken decades for the brand to become as powerful as it is today. This is certainly what makes up Nike's economic moat, allowing it to stand out against competition.

In the mid-1980s, the business signed NBA superstar Michael Jordan as its most high-profile endorsement at the time. This led to the launch of the Air Jordan line, which continues to release extremely successful products to this day. This also gave Nike a globally recognized athlete who could raise the brand's awareness and appeal with people everywhere.

Moreover, this was the start of Nike developing a core competency when it comes to marketing efforts. These days, the company is known for its incredibly influential advertising campaigns that not only resonate with people but exude a winning mentality. And there are numerous well-known athletes on Nike's endorsement roster now.

Of course, what really contributed to Nike's impressive share-price performance in the last three decades are strong fundamentals. Nike has done a fantastic job at growing its revenue and earnings over the years. Just in the last decade, sales and net income have increased at compound annual rates of 109% and 194%, respectively.

Thanks to the power of the brand, Nike products carry a premium status in the marketplace. The business posted a superb gross margin of 44.6% in the most recent fiscal quarter (second-quarter 2024 ended Nov. 30, 2023).

The current situation

Despite its tremendous historical success, Nike has hit a bit of a rough patch. Its sales are forecast to rise by just 1% in the current fiscal year. Management blames the challenging macroeconomic environment that is pressuring consumer demand. Elevated levels of uncertainty and ongoing inflationary concerns might discourage shoppers from spending money on discretionary items.

However, Nike is also facing stiff competition these days, which adds to the worries. There are many direct-to-consumer brands out there that have leveraged social media as a key marketing platform, and this might undermine the standing Nike has developed with customers.

In greater China, which has usually been the company's fastest-growing region, Nike reported sales of roughly $1.9 billion in the latest quarter, a lower number than three years earlier. The business might be losing market share to rivals.

But to its credit, Nike's gross margin actually expanded on a year-over-year basis. The company is successfully gaining better control over its inventory, which expanded by 43% in the year-ago period. The current inventory balance of $8 billion is 14% lower than it was at the end of Q2 2023. This indicates that management's top priority remains protecting the brand's status, which is the right thing to do.

As we set our sights on the next 30 years, how likely is it that Nike will once again produce a return of more than 9,500% between now and the beginning of 2054? To be clear, I don't think shares will repeat their historical performance. As a more mature enterprise, Nike's growth prospects will naturally decline as it gets larger and further penetrates its key markets.

Shares are currently trading 40% below their peak price, so some investors might still consider adding the business to their portfolios right now.