thirty-four year history, Nike has primarily been.
in the business of designing, developing, and.
marketing athletic footwear, apparel, equipment.
and accessories.
While approximately half of Nike's revenues are.
generated outside The United States, virtually all.
of the footwear manufacturing process takes place.
in foreign countries by independent contractors.
Nike is not in the business of making shoes, but.
developing and marketing them.
Product distribution is accomplished through.
numerous channels including independent.
retailers, distributors, licensees, and contractors.
In The United States, Nike sells its products.
through 18,000 distinct retailers alone.
To prevent large fluctuations in demand, and to.
facilitate better planning for the independent.
contractors that produce Nike's products, a unique.
futures program is used. In fiscal year 2002, 92%.
of U.S. footwear orders were taken through the.
futures program. The futures program influences.
retailers to place product orders in advance. The.
basic advantage of the futures program for Nike is.
the ability to better forecast product demand. This.
is essential since production is contracted out to.
independent manufacturers.
In fiscal year 2002, 11% of Nike's revenues were.
generated by Foot Locker, but no other customer.
accounts for over 10% of sales.
Economic Analysis.
Economic conditions have been struggling in The.
United States since the market collapse in 2000,.
but conditions are beginning to stabilize. Interest.
rates are at historic lows, and the Fed recently.
announced another cut in the discount rate to.
1.25%. Also, 10 year U.S. T-Bills are currently.
yielding 4.2%. By looking into the futures.
markets, there does not seem to be any upward.
pressure on interest rates either. These low.
interest rates are helping to prod consumers to.
continue their positive spending habits.
In the third quarter of 2002, GDP grew at an.
annual rate of 3.1%. While GDP growth has been.
fairly volatile over the past few years, it seems as.
