1. NIKE Golf
Market Capitalization: $194.53 billion
NIKE Golf is a product division of the Beaverton, Oregon-based sports and lifestyle footwear, apparel, accessories, and equipment maker NIKE, Inc. (NYSE:NKE).
Nike Golf pulled out of the golf equipment manufacturing segment in 2017 and instead decided to keep its focus on golf footwear, apparel, and accessories aligned with NIKE, Inc.’s (NYSE:NKE) core operations. Experts believe that the company generates a substantial amount of revenue through this division despite being one of the smallest divisions of the corporation. The brand has endorsements by top professionals and receives widespread recognition during leading events. NIKE, Inc. (NYSE:NKE) top line stood at $44.5 billion during FY21. The company does not disclose revenue generated by the golf segment.
Here’s what Madison Funds said about NIKE, Inc. (NYSE:NKE) in its Q2 2022 investor letter:
“NIKE, Inc. (NYSE:NKE) is the largest seller of athletic footwear and apparel in the world. Started from humble beginnings as Phil Knight’s “crazy idea” in a Stanford entrepreneurship class, Nike marked its 50th anniversary this year. By remaining true to its innovative culture, the brand is as strong as ever and continues to generate attractive growth, soon to surpass $50 billion in annual revenue. In addition to the continuous investments in brand innovation and marketing, over the last few years Nike has invested heavily to lay the foundation for multi-channel commerce. Today, Nike generates approximately 40% of its revenues through its online channel and branded storefronts. Empowered by CEO John Donahoe’s “Nike Consumer Direct Offense,” Nike’s ongoing investments are expected to further drive their overall revenue mix towards the direct-to-consumer channel which we estimate will result in substantial margin improvement over the next three to five years.
While Nike’s business in China, which accounts for approximately 20% of revenue, is experiencing challenges today, our due diligence suggests that consumer preference for the Nike brand outside the U.S. remains incredibly strong. Overall, we expect Nike’s broader ecosystem, often referred to as the Nike Marketplace, to continue to leverage the company’s innovation and premier brand to build direct consumer relationships which deepen Nike’s competitive moat and enhance its financial profile. Turbulence in the Chinese market and concerns over consumer spending in the US and Europe enabled us to initiate a position in Nike at an attractive discount to our appraisal of the company’s long-term value.”
Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below. You can also take a peek at the Value Investor Joel Greenblatt’s Dividend Stocks and the 12 Most Promising EV Stocks According to Analysts.
