Nike Regains Its Sales Footing

Analysts predict record sales growth and a bigger slice of athletic shoe market

WELCOME to Nike Inc., where athletics meets advertising around every corner.

At the sprawling headquarters near Portland, Ore., buildings are named after sports heroes, ranging from iron-man pitcher Nolan Ryan to basketball great Michael Jordan. Dozens more are enshrined in bronze plaques along an outdoor ''Walk of Fame.''

Over the last three decades, the firm has become the world's premier athletic shoe company by honing a simple strategy: design high-quality shoes for ever-more-specialized markets and employ the biggest sports stars money can buy to promote them.

Where people used to buy one all-purpose athletics shoe, Nike has turned the closet floor into a footwear arsenal.

And from Nike's 1974 ''Waffle Trainer'' running shoe, with a sole design modeled after the breakfast food, sports shoes have become as notable for their engineering as for their marketing.

Potholes in the road

But the road to success has had its potholes. The company's 1994 fiscal year, ending in the middle of last year, saw a downturn in earnings and investor confidence.

Lately, sturdy leather boots and outdoor shoes have gained appeal with the youngsters who make up Nike's core athletic shoe market.

But the company with the motto ''Just Do It'' has come roaring back. It's current stock price is $73 a share, up from a low in the recent slump of $35.

At the core of the recovery is a rebound in in basketball shoe sales, Nike's biggest category, plus strong growth in its newer outdoor line -- showing Nike is holding it's own amid consumers' shifting tastes. The company also is poised to see a recovery in Europe where the recession has taken its toll in recent years.

Philip Knight, Nike's chairman and founder, calls the latest quarterly results ''a clear validation of our strategy to maintain our focus on building the Nike brand.''

Moreover, a demographic change -- a growing teen market in coming years -- promises to provide a lift to the industry.

''We are back on track this year to report probably all-time record growth,'' says company spokesman Keith Peters.

Even the 1994 downturn, Mr. Peters notes, was mild enough that the year was Nike's second-best performance ever. For the first six months of the 1995 fiscal year, the company has profits of $191 million on $2.2 billion in sales.

Continually refreshing advertising and product lines, ''the company, is always reinventing itself,'' says Kevin Dukesherer, an analyst with Kemper Securities in Chicago.

The growing diversity of products can be weighed by hefting the 360 pages of Nike's spring catalogs for footwear, apparel, and accessories.

Among the recent hits, Peters says: an outdoor hiking shoe called Air Mada and a new line of ''cross-trainers'' (versatile athletic shoes) fine-tuned for practicing football on astroturf.

Creating new niches

''They have created a niche for [many] different shoes,'' says Lesa Sroufe, an analyst with Ragen McKenzie, a Seattle investment house.

Major shoe categories, each with numerous models, are running, basketball, tennis, cross-training, outdoor (including sandals), and cleated (including golf).

This week, Nike introduces three new cross-trainer models developed for baseball practice sessions (not to be confused with Nike's athletic shoes for baseball games.)

Mr. Dukesherer sees the company gaining two or three points of US market share this year, up from 32 percent last year. Reebok, No. 2, has about 20 percent of the branded athletic shoe market.

Analysts praise the company's advertising pitches, which routinely manage to stand out from the competition.

Last year, for example, Nike television ads veered away from emphasis on sports stars as athletes to messages from the stars about issues such as teen violence and the importance of sports for youths. Other ads featured actor Dennis Hopper as a football-crazed fan coming face to face with his gridiron idols.

Mr. Knight and his University of Oregon track coach Bill Bowerman founded Blue Ribbon Sports in 1962 to design shoes to be manufactured in Asia. The Nike brand was launched in 1972 and the corporate name changed in 1978. The company made its first public stock offering in 1980.

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