Case
Supplementary Resources
Abstract
By 2019, Nike was one of the world’s most recognizable brand names in the world, and a market leader in the sporting goods industry. The firm built its sporting empire based on successful marketing campaigns and endorsements from top athletes such as Tiger Woods, Mia Hamm and Michael Jordan, to spread their iconic “Just Do It” slogan. Although the firm had a long-lasting reputation as a sustainable company and had mended its image since the sweatshops scandals in the 1990s, it became the center of controversy with the #MeToo scandal and Colin Kaepernick campaigns. Nike was late to enter the Athleisure wear market, and now faces stiff competition from brands such as Lululemon, Athleta and Fabletics that were quick to capitalize on this new market. In an industry that now had non-athletic companies like Target, Amazon, or Tory Burch as competition, Nike must overcome its managerial shortcomings in diversity to prevent further losses in the Athleisure market share.
This case was prepared for inclusion in SAGE Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.
2023 Sage Publications, Inc. All Rights Reserved
Resources
Exhibit 1. Financials
NIKE, Inc. Consolidated Statements of Income
| (In millions, except per share data) | Year Ended May 31, | ||
| 2018 | 2017 | 2016 | |
| Revenues | $36.397 | $34,350 | $32,376 |
| Cost of sales | 20,441 | 19,038 | 17,405 |
| Gross profit | 15,956 | 15,312 | I4,971 |
| Demand creation expense | 3,577 | 3,341 | 3,278 |
| Operating overhead expense | 7,934 | 7,222 | 7,191 |
| Total selling and administrative expense | 11,511 | 10,563 | 10,469 |
| Interest expense (income) net | 54 | 59 | 19 |
| Other expense (income), net | 66 | (196) | (140) |
| Income before income taxes | 4,325 | 4,886 | 4,623 |
| Income tax expense | 2,392 | 646 | 863 |
| NET INCOME | $1,933 | $4,240 | $3,760 |
| Earnings per common share | |||
| Basic | $1.19 | $2.56 | $2.21 |
| Diluted | $1.17 | $2.51 | $2.16 |
| Dividends declared per common share | $0.78 | $0.70 | $0.62 |
NIKE, Inc. Consolidated Balance Sheets
| (In millions) | May 31, | |
| 2018 | 2017 | |
| ASSETS | ||
| Current assets: | ||
| Cash and equivalents | $4,249 | $3,808 |
| Short-Term Investments | 996 | 2,371 |
| Accounts receivable, net | 3,498 | 3,677 |
| Inventories | 5,261 | 5,055 |
| Prepaid expenses and other current assets | 1,130 | 1,150 |
| Total current assets | 15,134 | 16,061 |
| Property. plant and equipment, net | 4,454 | 3,989 |
| Identifiable intangible assets, net | 285 | 283 |
| Goodwill | 154 | 139 |
| Deferred income taxes and other assets | 2,509 | 2,787 |
| TOTAL ASSETS | $22,536 | $23,259 |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||
| Current liabilities: | ||
| Current portion of long-term debt | $6 | $6 |
| Notes payable | 336 | 325 |
| Accounts payable | 2,279 | 2,048 |
| Accrued liabilities | 3,269 | 3,011 |
| Income taxes payable | 150 | 84 |
| Total current liabilities | 6,040 | 5,474 |
| Long-term debt | 3,468 | 3,471 |
| Deferred Income Taxes and other liabilities | 3,216 | 1,907 |
| Commitments and contingencies (Note 15) | ||
| Redeemable preferred stock | — | — |
| Shareholders’ equity: | ||
| Common stock at stated value: | ||
| Class A convertible – 329 and 329 shares outstanding | — | — |
| Class B – 1.272 and 1.314 shares outstanding | 3 | 3 |
| Capital in excess of stated value | 6,384 | 5,710 |
| Accumulated other comprehensive loss. | (92) | (213) |
| Retained earnings | 3,517 | 6,907 |
| Total shareholders’ equity | 9,812 | 12,407 |
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $22,536 | $23,259 |
This case was prepared for inclusion in SAGE Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.
2023 Sage Publications, Inc. All Rights Reserved
