North America is Nike’s key market
Nike (NKE) has a vast global footprint. Its apparel and footwear are sold in over 190 countries worldwide. However, when it comes to revenues, North America continues to be Nike’s most important market, contributing around 45% toward its total sales.
In fiscal 2016, North America sales grew 8%, primarily led by strong momentum in the Sportswear category, the Jordan Brand, and the Running segment. Direct-to-Customer sales were strong, primarily driven by a 39% growth in Nike.com sales.
North America fiscal 1Q17 sales expected to beat a flat fiscal 4Q16
Nike’s (NKE) North America sales reported flat growth in fiscal 4Q16, mainly due to a delay in shipments in fiscal 2015 resulting from the West Coast port work stoppage. The company is in the process of clearing the resulting excess inventory via its network of factory outlets and selected wholesalers.
Nike is expecting North America revenues to return to growth in the first quarter of fiscal 2017. However, the company expects its gross margin to contract in fiscal 1Q17 as it completes the inventory offloading process. In the next article, we’ll look at Nike’s expected performance in fiscal 1Q17.
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Competition in North America
Nike (NKE) is the clear leader in North America, with a market share that exceeds 60% in the athletic footwear market. However, the company has been facing increasing competition from Adidas (ADDYY) and Under Armour (UA).
Adidas’s Ultra Boost, launched in early 2015, has impacted the sales of Nike’s Running business. Nike’s Basketball segment is competing with Under Armour (UA) and Adidas (ADDYY) alike. Lululemon Athletica (LULU), which primarily sells athletic apparel, is also increasingly gaining traction in North America.