Nike's Direct Sales Are Poised to Grow in Emerging Markets

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NIKENike (NKE) witnessed a 23% increase in its direct-to-consumer business in the North American region in its last quarter. This jump was driven by an 18% improvement in same-store sales and 31% growth in online sales. Direct-to-consumer sales include those purchases made online and at company-operated stores. Nike is the largest global manufacturer of athletic footwear, apparel and equipment, and competes with Sketchers (SKX), Adidas AG (ADDYY), Steve Madden (SHOO) and K-Swiss (KSWS).

We currently have a price estimate of a near $85.30 for Nike's stock, which implies a small discount to the market price.

Direct to Consumer Business Driving Growth at Nike

With increasing Internet penetration in emerging markets like Brazil, India and China, which together contribute approximately 22% to Nike's overall revenues, we believe online sales are poised for impressive growth.

Nike plans to boost its direct-to-consumer presence by opening between 250 and 300 new Nike-branded stores worldwide in the next five years. It also plans to invest between $500 million and $600 million over the next five years to develop the direct-to-consumer business. Nike expects mid-teens growth in its direct to consumer business, which should contribute an additional $2.2 billion to 2.6 billion in revenues by 2015.

See our complete analysis for NIKE's stock here

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