How NIKE Makes Money

NIKE Inc. (NKE) is a global footwear and apparel company that designs, develops, markets, and sells athletic footwear, apparel, equipment, accessories, and services. Although primarily designed for athletic use, many of its products are worn for casual or leisure activities.

NIKE's Industry

The majority of NIKE's products are manufactured by independent contractors and sold either directly to consumers through NIKE retail outlets and digital platforms, or by independent distributors, licensees, and sales representatives. NIKE is based in Oregon with many global rivals, including Adidas AG (ADDYY), ASICS Corp. (7936), Lululemon Athletica Inc. (LULU), Puma SE (PUMSY), and Under Armour Inc. (UAA). NIKE operates through three segments: NIKE Brand; Converse; and Corporate.

• NIKE Brand: Includes six geographical segments: North America; Europe, Middle East & Africa; Greater China; Asia Pacific & Latin America; and Global Brand Divisions.
• Converse: NIKE's Converse segment is engaged in the design, distribution, licensing, and sale of casual sneakers, apparel, and accessories under the following trademarks: Converse, Chuck Taylor, All-Star, One Star, Star Chevron, and Jack Purcell.
• Corporate: NIKE's Corporate segment revenue primarily consists of foreign currency hedge gains and losses related to revenues generated by NIKE's other operating segments.

NIKE’s Financials

NIKE announced in March financial results for Q3 of its 2024 fiscal year (FY), the three months ended Feb. 29, 2024. The company posted a net income of $1.2 billion, down 5% from the year-ago quarter. Revenue stayed flat year over year (YOY) with $12.4 billion. Earnings before interest and taxes (EBIT), a profitability metric NIKE uses for its business segments, dropped 5% YOY to $1.4 billion. The NIKE Brand segment comprises over 95% of the company's total revenue.

NIKE breaks out revenue, but not profits, for its major product lines and distribution channels. The share of revenue generated by product lines in Q3 FY 2024 was: Footwear (68%); Apparel (28%); Equipment (4%); and Other. A negligible amount is attributable to Other, which includes revenue from licensing businesses of the Global Brand Divisions and Converse segments, and to foreign currency hedge gains and losses accounted for in the Corporate segment. NIKE reports revenue and EBIT for its business segments.

History and Leadership

NIKE’s identity was inspired by the Greek goddess of victory and the company was first founded in 1964 as Blue Ribbon Sports by Phil Knight and Bill Bowerman. During the 1970s, NIKE moved from importing Japanese shoes to creating its own footwear. By 1971, the company's Swoosh was created by Carolyn Davidson. In 2024, the company has headquarters in the U.S., China, and the Netherlands with John Donahoe serving as NIKE's President and CEO. 

Recent Developments

In 2023, Football Australia and Nike executed a 10-year contract extension for a third decade, the longest of Nike’s federation and club partnerships in Australia. In Feb. 2024, NIKE partnered with NFL clubs to increase opportunities for Native American and Indigenous youth.

The Bottom Line

NIKE enjoyed an estimated sales of more than $22 billion in 2023. The company holds the largest market share for sneakers globally. NIKE was founded in 1969 and has headquarters in the U.S., China, and the Netherlands.