When Nike (NKE 2.87%) went public on Dec. 2, 1980, the athletic footwear and sports apparel company was already white-hot. In 1972, its sales were less than $2 million, but over the next nine years, they surged by an average of 85% annually. Its net income grew even faster, averaging almost 100% per year, leading management to crow in its 1981 annual report that Nike had "raced ahead of its competitors and attained its premier position in the industry."
But could it sustain that momentum? The shoe business is competitive enough that even legendary investor Warren Buffett has been burned by it: The Oracle of Omaha once called his $443 million investment in Dexter Shoe Company the "most gruesome mistake" of his career. Buffett's stumble highlights how hard it can be to discern which consumer products businesses have genuine moats and which don't.
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In 1982, a New York Times article speculated that Nike might be in the latter category. Noting that the company was now a major force in the specialty shoe business, it noted that the industry "has stymied a lot of companies." Nike had raked in an estimated $665 million in sales over its prior fiscal year, and had gotten so big that skeptics were "asking whether the game is already over."
But for Nike, it wasn't even halftime. The company continued to grow like a small cap. In 1990, it officially became the world's largest sports footwear and apparel company, growing its profits by 45% for the fiscal year, while annual revenues swelled by 30% to $2.23 billion. However, its 28% market share in the United States left competitors like Reebok and L.A. Gear, with 22% and 12% of market share respectively, within striking distance.
To protect its lead, Nike enlisted Tiger Woods, Serena Williams, John McEnroe, Roger Federer, and other international star athletes to endorse its brand. The company even paid Woods $500 million over the years, with their deal ending in 2004. By then, Nike was enjoying yet another record-breaking year, with $1.2 billion in revenue, a 15% increase over its fiscal 2003, and 27% growth in earnings per share.
In the fourth quarter of its fiscal 2014, Nike earned operating revenue of $7.4 billion -- more than it had made in its entire fiscal 2004. And by 2024, its full-year revenues had grown to $51.2 billion.
Nike's recent rough patch
However, it hasn't all been smooth sailing for the company. A host of issues, including its direct-to-consumer sales pivot, inventory management problems, and uninspired product innovation, led to stagnating sales in recent years.
In the fourth quarter of its fiscal 2025, which ended May 31, management reported results that were in line with expectations, but "not where we want them to be." Revenues were down 12% year over year, while gross margin decreased from 44.7% to 40.3%.
But when it delivered its fiscal 2026 Q2 report earlier this month, management said Nike was in "the middle innings of our comeback" and pointed to progress in its "Win Now" initiative to strengthen partner relationships, rebalance its portfolio, and continue its history of innovation to drive long-term growth and profitability in its brands.
Shares of Nike are down 19% year to date, a disappointing return both in light of the S&P 500's 17% rise and Nike's history of spectacular growth. However, the company just announced its 24th consecutive annual dividend increase. It now stands on the cusp of a milestone that few companies achieve: Dividend Aristocrat® status, which is limited to S&P 500 components that have raised their payouts every year for at least a quarter century. (The term Dividend Aristocrat® is a registered trademark of Standard & Poor's Financial Services LLC.)
NYSE: NKE
Key Data Points
How much would $100 invested in Nike's 1980 IPO be worth now?
Since 1980, Nike has undergone seven 2-for-1 stock splits, giving it a split-adjusted IPO price of $0.18 per share. Anyone who had invested $100 then and held on until today, without reinvesting dividends, would own 555 shares worth a total of roughly $33,900. That's a 33,800% return. As for dividends, those shares would be paying $910 per year, or roughly nine times your initial investment.
With dividends reinvested, the initial $100 would have mushroomed into an $55,077 holding -- or about 898 shares. Those shares would be paying $1,472 in annual dividends at the current distribution rate. The numbers show the long-term power of a durable brand, even one that has run into headwinds of late.
