Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

3 Ways Nike Is Still Innovating

By Philip Saglimbeni - Mar 30, 2014 at 5:00AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Although more mature than most competitors, Nike is still displaying a commitment to innovation. This should help the company continue to grow at a solid rate in the future.

For an athletic apparel and sporting-goods manufacturer that is as dominant on a global scale as Nike ( NKE 0.14% ), 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.

Source: Company Facebook

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 -0.13% ). 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.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Under Armour, Inc. Stock Quote
Under Armour, Inc.
UAA
$23.47 (-0.13%) $0.03
NIKE, Inc. Stock Quote
NIKE, Inc.
NKE
$170.24 (0.14%) $0.24

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
640%
 
S&P 500 Returns
139%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/03/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.