Company Strategy:
Although the company enjoys good organic growth opportunities, it is definitely in the mature growth stage. To counter this, Nike has increasingly turned to acquiring brands both for inorganic growth, and to allow the company to compete on different levels in the industry. Through this type of brand portfolio use, Nike is able to sell in discount retailers, increasing growth and ultimately revenues without fear of discounting the core Nike brand.

The company’s track record is generally favourable with its acquisitions, with exceptions including the relatively recent sales of Bauer (April 2008) and Starter brands (Dec 2007). Not all portfolio acquisitions have been extremely successful for Nike, so future purchases must be examined carefully before an analyst can assume the purchase will be a significant growth driver for the company. For example, Bauer was sold for $200M after being purchased in 1995 for $409M. Although hockey seemed like a hot market at the time, the market softened and a re‐evaluation of the brand found that Bauer was primarily in a North American position, not becoming a global growth driver. This geographic limitation and slow growth ultimately lead to Nike selling the company to focus on faster growing global sports markets.

Cole Haan, Converse, Exeter Brands Group, Hurley, Umbro, NIKE Bauer Hockey (which sold in April, 2008) and NIKE Golf accounted for approximately 14 percent of total revenues. The subsidiary companies will probably grow at a faster rate than the Nike brand, but the company expects the bulk of revenue increases to be from the Nike brand through the category re‐alignment and increases in the direct to consumer market. China will be a significant player for this category growth.
For example, “some 50 million kids between the ages of 10 and 19 have begun playing basketball”, which means an