Sales Growth
In accordance with Nike’s current financial statement and its comparison with data from previous years, it is possible to predict the company’s growth and development, with potential for insignificant declines. In particular, its management proficiently considers the importance of systematic change and a correct response to customer demands and unexpected circumstances. Thus, Nike’s sales growth in 2023 is 9.46% higher compared to 2022, and sales growth in 2022 is 5.17% higher than in 2021 (WSJ, n.d.).
In 2020, it demonstrated a 4.35% decrease due to the pandemic, which substantially impacted companies’ supply chains and customers’ purchasing power and ability to visit physical stores. However, to retain customer loyalty, attract new clients, and provide excellent customer service, Nike increased geographical diversity, invested in optimizing its inventory, and accelerated automation (Rowsell, 2022). As a result, the brand’s financial statement in 2020 demonstrated an 18.90% in sales growth.
Cost of Goods Sold
At the same time, the company’s Cost of Goods Sold (COGS) has been continuously growing since the pandemic. In 2023, it is 14.75% higher than in 2022 (WSJ, n.d.). This tendency may be attributed to the economic crisis triggered by global events, which has led to rising costs in nearly all spheres of human activity. COGS impacted gross income and net income in combination with customers’ decreased purchasing power.
While gross income continues to grow, this growth cannot be considered substantial compared to previous years. For instance, in 2021, it was 25.24% higher than in 2020 (WSJ, n.d.). In turn, net income declines – in 2023, it is 16.14% lower than in 2022 (WSJ, n.d.). Additionally, Nike’s fixed costs continue to increase. However, it may be regarded as a general tendency of a multinational company, which introduces new strategic opportunities and advantages rather than failure.
Financial Forecast
The efficient response to the pandemic’s limitations, which contributed to brand distinction and reputation, may be regarded as a substantial reason for predicting the company’s further growth, reliability, and stability. First, the company successfully operates in both digital and physical environments – specifically, its owned store sales increased 14%, while digital sales rose 24% in 2023 (Haleem, n.d.). Moreover, according to the brand’s latest report, it “continues to have a strong track record of investing to fuel growth and consistently increasing returns to shareholders, including 21 consecutive years of increasing dividend payouts” (Nike, 2023). Therefore, the company’s sales and revenue demonstrate its growth. At the same time, the increase in fixed costs and a decrease in net income may be linked to global economic struggles; the natural rise in expenditures of a continuously growing large company operating in a highly competitive business world should also be considered.
Potential for Investment
While the pandemic posed a serious challenge for numerous organizations worldwide, the analysis of Nike’s financial statements and balance sheet demonstrates its effective use of efficient strategies, competent management, and the ability to optimize internal processes in response to adverse external conditions. That is why the company may be regarded as an attractive investment due to its stability, potential for growth, and flexibility. Moreover, its performance may be positively influenced by trends in the sportswear and athletic shoe industries. In particular, these products will remain among the top purchases due to collaborations with influencers, the merging of fashion with footwear, changing consumer habits, and a growing focus on a healthy lifestyle.
References
Haleem, A. (2023). Nike digital sales continue growth trend through fiscal 2023. Digital Commerce 360. Web.
Nike. (2023). Investor new details. Nike. Web.
Rowsell, J. (2022). How Nike transformed supply chains to survive Covid. Supply Management. Web.
WSJ. (n.d.). Nike Inc. Cl B. WSJ. Web.