- Prachi Singh |
Nike provided an overview of its progress on key strategic initiatives to achieve sustainable, profitable long-term growth. During an investor meeting at its world headquarters near Beaverton, the company announced a revenue target of 50 billion dollars by the end of fiscal year 2020.
Additionally the company also shared its long-term financial model of high single-digit to low double-digit revenue growth, mid-teens earnings per share growth and expanding returns on invested capital.
“Nike is built for growth,” said Mark Parker, President and CEO of Nike, adding, “We see tremendous growth potential in our key categories and geographies, as we connect with athletes through personal service, inspirational experiences and innovative product. When we look across our entire business, there has never been more opportunity.”
Eyes growth across geographies
The company updated its projected long-term growth plans in the Nike brand geographies through fiscal 2020. For its more developed geographies such as North America, Western Europe and Japan, it now expects to generate average annual growth at a high single-digit rate over the next five years. The company expects North America to reach 20 billion dollars in revenue by the end of fiscal year 2020.
For its developing geographies and emerging markets like Greater China, and Central & Eastern Europe, the company expects to grow at a low double-digit average annual growth rate for the next five years. The company expects its emerging markets geography to grow at a low double-digit average annual growth rate and for Greater China to grow at a mid-teens growth rate over the next five years, reaching 6.5 billion dollars in revenue by the end of fiscal year 2020.
Focus on omni-channel and categories to achieve target
The company plans to drive growth in its Nike brand direct to consumer (DTC) operations. Driven by its digital business as well as inline and factory stores, the company now anticipates achieving 16 billion dollars in revenue by the end of fiscal year 2020. Over the next five years incremental growth in DTC revenues is expected to be driven by e-commerce sales, which are projected to grow to seven billion dollars. The company also expects to drive wholesale growth in the mid-to-high single-digit range over the next five years.
Nike expects its women’s business to reach 11 billion dollars in revenue and the running category to grow to 7.5 billion dollars by the end of fiscal year 2020. The Jordan brand, which will be reported separately from the Nike basketball category going forward, is expected to nearly double in size, to 4.5 billion dollars.
“The company’s strong and consistent financial performance over the past 10 years has fuelled total shareholder returns in the high-teens on average, significantly outperforming the broader market and placing us in the top quartile of the S&P 500,” said Andy Campion, Executive Vice President and Chief Financial Officer.