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Nike, Inc.
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== '''Business Overview''' == Nike's core business model operates as a manufacturer, marketer, and distributor of athletic footwear, apparel, equipment, and accessories. The model revolves around two primary components: production and sales. Firstly, Nike designs and manufactures its products, catering to athletes and consumers seeking performance-oriented gear. Secondly, the company employs a multi-channel distribution strategy, encompassing direct-to-consumer platforms, such as its website and retail stores, as well as partnerships with third-party retailers. Nike generates revenue primarily through product sales, setting prices that encompass production costs and desired profit margins. This approach enables Nike to uphold its brand reputation while catering to a diverse global market of athletes and lifestyle consumers. === '''2023 Performance Highlights''' === NIKE's annual revenue for 2023 reached $51.22 billion, reflecting a 9.65% increase compared to 2022, or 16% when adjusted for currency fluctuations. The notable growth in revenue was primarily propelled by a surge in sales in the North American region. However, the company's gross margin for the fiscal year experienced a decline of 250 basis points, settling at 43.5%. This decrease was predominantly influenced by higher product costs, increased markdowns, and unfavourable shifts in foreign currency exchange rates. These effects were partially mitigated by strategic pricing actions. In 2023, the normalized EBITDA amounted to $5.92 billion, marking an 11% reduction from the previous year. This decline in EBITDA was driven by demand creation expenses totalling $4.1 billion, indicating a 5% rise compared to the prior year. These expenses primarily encompass advertising, marketing, and sports marketing. Additionally, operating overhead expenses increased by 12%, reaching $12.3 billion. This increase was primarily attributed to wage-related expenditures, NIKE Direct variable costs, and higher investments in strategic technological advancements. In fiscal year 2023, Nike distributed $7.5 billion to shareholders, comprising a $2.0 billion dividend increase and a substantial $5.5 billion share repurchase program, retiring 50.0 million shares. This encompassed $0.7 billion for 6.5 million shares from the 2018 program and $4.8 billion for 43.5 million shares from the 2022 program. {| class="wikitable" |''All figures in USD billions'' | | | |- | |2022 |2023 |2023 |- |'''Income Statement''' | | | |- |Revenue |44.5 |46.7 |51.2 |- |Operating Income |6.9 |6.7 |5.9 |- |Net Income |5.7 |6.1 |5.1 |- |EBITDA |7.7 |7.5 |6.8 |- |Diluted EPS |3.6 |3.8 |3.2 |- | | | | |- |'''Balance Sheet''' | | | |- |Total Assets |37.7 |40.3 |37.5 |- |Total Liabilities |25.0 |25.0 |23.5 |- |Total Debt |12.8 |12.6 |12.1 |- |Total Equity |12.8 |15.3 |14.0 |- |Cash |13.5 |13.0 |10.7 |- |Working Capital |16.6 |17.5 |16.0 |- | | | | |- |'''Cash Flow''' | | | |- |Operating |6.7 |5.2 |5.8 |- |Investing |<nowiki>-3.8</nowiki> |<nowiki>-1.5</nowiki> |0.6 |- |Financing |<nowiki>-1.5</nowiki> |<nowiki>-4.8</nowiki> |<nowiki>-7.5</nowiki> |- |Capital Expenditure |<nowiki>-0.7</nowiki> |<nowiki>-0.8</nowiki> |<nowiki>-1.0</nowiki> |- |Free Cash Flow |6.0 |4.4 |4.9 |} === '''Key Strategies''' === Nike's growth strategy centres on innovation, sustainability, and global expansion: * '''Innovation and Technology:''' Nike's business strategy revolves around technological innovation, propelled by substantial investments in research and development. This focus has resulted in pioneering breakthroughs such as auto-lacing shoes, iPod-based pace and distance tracking, and airbag technology. By prioritizing innovation, Nike ensures its continuous leadership in introducing novel products to the market. * '''Diversification:''' A distinct facet of Nike's business strategy is diversification, underpinning its differentiation approach. Despite its commitment to quality, Nike caters to a broad spectrum of consumers by offering an extensive range of products, spanning various sports and activities. * '''Economies of Scale:''' As a dominant global sports equipment and textiles producer, Nike leverages economies of scale through bulk purchasing and price control of raw materials. This strategic advantage enables the company to secure significant discounts, resulting in lower production costs and enhanced profitability. * '''Outsourcing:''' Nike's core business model relies on outsourcing, particularly from Asian countries. This approach grants the company several advantages, including reduced production costs, lean operations, and flexibility in adapting to changing product prices.
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