3 Reasons Why I Love Nike, Inc. (NKE) (And You Should Too)

Page 1 of 2

NIKE Inc. (NKE)Nike, Inc. (NYSE:NKE) is a footwear and apparel juggernaut. It can be a hard business selling shoes, clothes, and athletic gear– especially in hard economic times when consumers tend to spend less. Nike, however, is by far and away the best in class, and I will outline 3 reasons why:

1.) Everyone knows Nike…

The brand. Brand is everything. Everyone talks about “the brand” and image of a company. Nike has more than just a brand– it has a cult following. Sneaker heads still go crazy over a pair of Nike Dunk style shoes, or even the Air Force Ones, which are still going strong in numerous different colors even though the style was originally introduced way back in the early 80’s. Then there is the company’s Jordan brand. Michael Jordon is arguably the best basketball player (and maybe even athlete) of all time, and his shoes are more than just popular– they are ridiculously collectible. Nike could never introduce another style of shoe and most likely still dominate just by re-releasing their more successful older styles. The same can’t be said for most competitors.

They also tend to attract the best athletes. Okay, so Lance and Tiger may have backfired, but at the time of signing they were top-of-the-list talent. They still have the old-school players like Jordan, as well as the new school future legends like LeBron James and Rory McIlroy. It’s hard to picture a world without Nike sneakers when they have become so ingrained in our culture: Nike sneakers have been worn by everyone from the likes of Forest Gump to recent reality television show characters such as Chum Lee of Pawn Stars.

2.) Strong leadership willing to adapt to the times…

Nike also has strong, visionary management. According to CEO Mark Parker:

“Business models are not meant to be static… In the world we live in today, you have to adapt and change. One of my fears is being this big, slow, constipated, bureaucratic company that’s happy with its success. That will wind up being your death in the end.”

This is in reference to the company expanding past just footwear and into things such as wearable devices. With new technological products such as Fuelband and its Nike+ digital platform, the company is merging technology, wearable devices, and fitness into products that can help it adapt to a future filled with connectivity devices. Nike’s Fuelband, an electronic wristband that tracks your energy output, makes sense as a way to integrate the company into the digital age, and others are taking note.

Competitor  Under Armour Inc (NYSE:UA) has decided to follow Nike into the wearable device trend. The company’s fitness monitoring product, the Armour 39, is taking aim directly at the throat of Nike’s Fuelband, and measures heart rate, calories burned, and intensity. The device then comes up with a combined score that Under Armour calls “WILLpower,” which is extremely similar to what Nike’s device calls a “Fuel Score.” Unlike Nike, however, Under Armour plans to eventually release an Android app for their product instead of relying exclusively on iOS (like Nike decided to do, after dropping their support for Android).

Nike is still ahead of Under Armour in digital, however, as they have more to offer. The company has also paired up with  Microsoft Corporation (NASDAQ:MSFT) to integrate digital training with the Xbox. Yusuf Mehdi, corporate vice president of Microsoft’s Interactive Entertainment Business, had the following to say:

“We believe that Xbox is being used by more people in the household, during more hours in the day and for more forms of entertainment… People are using Xbox in the morning to work out with the Kinect Nike-Plus-Fitness program, kids are watching cartoons, families are enjoying movies, and of course people are playing blockbuster games like ‘Halo 4.'”

Page 1 of 2