(Your Professor’s name)
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Nike and Adidas are leading brands in the sports apparel industry. These billion dollar brands have to survive tough competition from their counterparts each day. Over the last couple of decades both these brands have established themselves as synonyms in the sports industry. This paper compares both these brands and determines the growth or declining trend in their performance.
An analysis of the net income of both of these brands over the past decade reveals a slight difference. Where Nike’s “net income was $1212 million in 2005, Adidas’ was €390 million” which is equivalent to $1022 million, a little less than Nike’s (“Nike Inc Class B”, 2015). Nike has been earning steady profits since 2005 whereas Adidas’s net income reduced from “€787 million in F.Y.2012-13 to €490 million in F.Y.2013-14” (“Adidas AG ADR”, 2015). Moreover, a financial analysis of both companies in 2014 reveals that Nike has better profitability, efficiency and solvency in comparison to Adidas. There is a huge difference in profitability ratios of both companies in 2014 which is due to the fact that Adidas has not been able to generate sufficient profits since the previous year. It seems that every five years, Adidas’s net income falls steeply in comparison to the growing profits of the previous years.
However, both their net profits have shown growth over the past decade. Nike’s market demand and better global matrix has resulted in more profits for the company. Another reason for Nike’s success can be attributed to its vigorous ‘hit the target’ marketing and commercial strategies. Nike certainly has an edge over the other brands and has clearly established itself as a market leader. Better global business strategies and marketing style has made Nike more stable and efficient in its financial performance. Adidas is not far behind as well and since its main focus is on innovating products, it may give it an advantage over Nike in the coming few years.
“Nike Inc Class B- Key Ratios.” Morningstar.com. 2015. Web. 24 July 2015.
“Adidas AG ADR- Key Ratios.” Morningstar.com. 2015. Web. 24 July 2015.