What are Nike’s growth catalysts going forward?
While discussing the key focus areas for fiscal 2017, Nike’s president and CEO, Mark G. Parker, noted, “Our focus will be to continue to drive our potential across North America and Western Europe, to expand our leadership in China and across our emerging markets, to unleash the power of the Jordan Brand across multiple categories, to accelerate our complete Women’s business, and to grow the Young Athletes business globally through premium products and extend our leading position in Running, Basketball and Sportswear.”
We’ll discuss some of these key focus areas in this article.
Greater China to drive growth
China is the world’s second-largest sportswear market, after the United States. Nike is the leading sportswear brand in China, and Greater China is Nike’s fastest-growing market.
In fiscal 2016, Nike reported double-digit growth in nearly all of its international markets outside North America. Greater China outshone the other regions by delivering a strong 27% increase on a currency-neutral basis.
The company is poised to take advantage of the world’s fastest-growing market through its tailor-made assortment of products, specifically developed for Chinese customers. Nike is looking for the average annual growth to lie in the mid-teens for Greater China over the next four to five years.
Expanding the global footprint of Nike.com
Nike (NKE) has been working hard toward improving its digital presence. The company has made significant investments in developing its Nike.com platform.
In fiscal 2016, the Nike.com business grew by a whopping 46%, with double-digit to triple-digit growth in all its key geographies. The company expanded its online business to 20 new markets, increasing its reach to 40 countries worldwide.
Nike is still in the early stages of its e-commerce business, and there still exists enough scope for further expansion. The company has a target to achieve $7 billion in online sales by fiscal 2020.
ETF investors seeking to add exposure to NKE can consider the SPDR Consumer Discretionary Select Sector ETF (XLY), which invests 3.1% of its portfolio in NKE. XLY also invests 0.95%, 0.36%, and 0.3% of its portfolio in V.F. Corp. (VFC), PVH Corp. (PVH), and Under Armour (UA), respectively.