Financial Analysis: Nike Vs. Adidas

Comparing Nike vs Adidas is like trying to compare, LeBron and Jordan, or Messi and Ronaldo. Both are game changers in athletic wear. The controversy can never be solved because everyone has their own opinion to which brand they like better. For some, they idolize Nike because of the athletes that they sponsor. Others, like to rock the urban style of Adidas. Nike and Adidas have been going head to head for as long as anyone can remember. Nike was founded and established in 1964, while Adidas was founded and established earlier in 1948. There are lot of differences between these two companies, but the ultimate deciding factor to which brand customers prefer comes down to their own opinion.

Nike is a company that has thoroughly embedded itself into the psyche of people around the world. It's a company that started with humble origins from selling footwear in the basement to becoming the behemoth in the athletic industry. Bill Bowerman, University of Oregon track & field coach, and Phil Knight, middle-distance runner under Bowerman co-founded Nike. Nike was first established as Blue Ribbon Sports in 1964 as a partnership and the name Nike was officially adopted on May 30, 1978. The infamous Nike Logo - Swoosh, was created for a fee of $35 by Carolyn Davidson, a graphics design student. In 1980, Nike becomes a publicly traded company with the completion of its Initial Public Offering of 2,377,000 shares

Nike’s net accounts receivable had increased from $2,494.7 million on May 31, 2007 to $2,795.3 million on May 31, 2008. They has been dealing with a higher accounts receivable balance as a result of a longer collection cycle, reflecting a more challenging retail environment experienced by their customers in the EMEA and U.S.

Under Armour in 2009 drastically focused on improving their inventory position, strengthening their balance sheet and improving the efficiency of their working capital (2009). Under Armour’s inventory turnover ratio of 2.68 in 2009 compared to 2.13 in 2008 indicates they are more efficient at moving inventory more quickly through production to the end consumer reducing storage and other related carrying costs (Libby, Libby, Short,

In 2015, NIKE experienced an increase of cash and equivalents from $2.2 billion to $3.8 billion. Alternatively, Under Armour encountered a decrease in cash from $593 million to $129 million. Account receivables for NIKE decreased in 2015 from $3.3 billion to 3.4 billion in 2014. As for Under Armour, account receivable enhanced from to $279 million to $433 million in 2015, which was a result of higher sales accumulated by international consumers. Recent store opening increased NIKE’s inventory to $4.3 billion compared to Under Armour’s $783 million, which came from investments in replenishment products. Moreover, Under Armour registered total assets for 2015 were $ 2.8 million that resulted in an asset turnover rate of 1.381. As a result, NIKE

Cohen's calculation considered the book values to calculate the proportion of equity for calculating the value of WACC which should only be done if the target or

Our team has reviewed and compiled an assortment of financial statements and documents pertaining to the firm’s progress and financial position in comparison to its direct competitor, Nike. Through our financial analysis, we have identified potential areas of strength and weakness for Under Armour and Nike, which we plan to address and call to the attention of Under Armour’s management team.

Finally in 2010, Nike started a repurchase program for share which made their other total equity goes down 41.55% and their cash short-term investment 48.94%. Also their pretax charge of $401.3m for the impairment of goodwill, intangible and other assets of Umbro, their income tax went up 29.89% and their Accounts payable went up 21.57% which could be link. Their net profit margin rose from 9.1% to 10.1% in 2009 because of increase in price changes. Their inventory and accounts receivable balances were down 13% and 8%, respectively, compared to May 31, 2009. They also returned larger amounts of cash to shareholders through higher dividends and increased share repurchases compared to fiscal 2009. Worldwide NIKE Brand apparel and equipment revenues declined 5% and 7%, respectively however the wholesale business remains the largest component of its revenues, the Nike-owned retail business continues to grow, representing

clear assessment of the financial health of the company: NIKE International. Just knowing that this company chose a symbol that references the winged goddess of victory seems to have been a premonition for the designer of the ‘swoosh’ as well as the founder, Phil Knight, of NIKE. (Hinker,)

Nike’s total revenue has steadily increased over the years. In 2013, Nike’s cash and equivalents totaled of $3.3 billion. This was 25.5% higher than cash and equivalents in 2012. Cash and cash equivalent is one of the big asset account in the company’s assets. Cash increased by 18.5% in 2012, and in 2013 it increased by 44%. Nike has an up and down in short-term investments account. In 2012, the short-term investments decreased by 44.3% but in 2013 it went up almost double by 82.5%. In 2011, investments made up 17.2%, in 2012 investments made up 9.3%, and in 2013 investments made up 15% of the company’s total assets.

After sluggish focus and growth in the 1980ies, Nike experienced strong growth in the 1990ies and cemented the position as global recognizable brand. The increased international focus created strains on the supply chain, which was consider inadequate to cater efficiently to the organization and the rapid changes consumer demands . As a consequence of the afore mentioned supply chain problem Nike faced inefficient inventory management, problems in flow of goods and poor demand

Although facing major competition throughout their history, Nike has been able to grow from a two-man team into a multibillion-dollar corporation in less than 40 years.

Just do it! Most people know this slogan is a trademark of Nike’s shoe company and one of the core components of Nike’s brand. Brand equity represents the sport consumer’s associations (both positive and negative) with a sports team’s name, logos, and images (Gladden & Wong, 1997). Essentially, there are four main pillars to brand equity. First, perceived quality is consumer’s judgments of an item’s excellence in respect to its intended purpose. In the case of sport, this alludes to the sport consumer’s perception of the quality of a team relative to its competition. An example of the competition would include other teams in the conference/league. Second, brand awareness is the way a consumer will recall a brand and its name. A

On a like-for-like basis, Reebok segment sales declined by 5% in 2007. At TaylorMade-Adidas Golf, currency-neutral revenues increased 1%, negatively impacted by the divestiture of the Greg Norman Collection wholesale business. On a like-for-like basis, TaylorMade-Adidas Golf sales increased 9%. Sales in the HQ/Consolidation segment decreased by 60% on a currency-neutral basis, mainly due to the expiration of the Salomon footwear sourcing cooperation agreement. Currency translation effects negatively impacted sales in all segments in euro terms. Adidas sales increased 7% to € 7.113 billion in 2007 from € 6.626 billion in 2006. Sales at Reebok decreased 6% to € 2.333 billion versus € 2.473 billion in the prior year. TaylorMade-Adidas Golf sales declined 6% to € 804 million in 2007 from € 856 million in 2006. HQ/Consolidation sales decreased 62% to € 48 million from € 129 million in the prior year. (Adidas-group factsheet 2007).The merger and acquisition has gone beyond expectation. Although there were reports of declining sales of Reebok in the North America in the early years of its acquisition but this was due to the currency-neutral sales in the Reebok which is now associated to the turnover. But in later years, beginning 2010 despite the economic turmoil in US and Europe the Adidas Group together with other subsidiary products continues to boost its sales.Such increases are

• Nike has no factories. It does not tie up cash in buildings and manufacturing workers. This makes a very lean organization. Nike is strong at research and development, as is evidenced by its evolving and innovative product range. They then manufacture wherever they can produce high quality product at the lowest possible price. If prices rise, and products can be made more cheaply elsewhere (to the same or better specification), Nike will move production.