Facing Tough Competition, Nike Is Moving Forward With Aggressive Expansion

Nike Headquarters Planned Expansion
A mock up of Nike's planned headquarters expansion, revealed in April.
Nike.

Despite heavier competition from peers Adidas and Under Armour, Nike Inc. is not slowing down its expansive growth strategy.

The Beaverton, Ore.-based company announced last week its plans for a sixth building as part of the expansion of its world headquarters in Oregon. Nike said that construction on the building is due to begin in mid-2017, and the building is expected to include approximately 360,000 square feet of office space and an additional 330,000 square feet for parking. Like the other buildings under development at the Nike’s mega headquarters, designs for the structure will aim for LEED Platinum Certification.

News of the continued expansion comes after Nike’s undisputed athletic industry dominance faced increasing pressure from unprecedented growth of Adidas and Under Armour during the past year and a half.

Nike’s Q1 earnings report, announced on Sept. 27, may have added more fuel to the fire. While the firm’s sales and profit— at $9.1 billion and $1.2 billion, respectively — handily topped estimates, an ongoing slowdown in future orders signaled that the brand’s desirability could be on the downturn.

Nike said its Q1 worldwide futures orders were up 5 percent and 7 percent excluding currency changes — those results missed analysts’ forecasts for growth of 8 percent and also showed ongoing deceleration.

The slowdown in futures underscores our concerns around competition from Adidas and UA impacting orders and lack of exciting new product to warrant increased shelf space allocation,” Canaccord Genuity Inc. analyst Camilo Lyon wrote on Sept 28, on the heels of the earnings report.

Last week, Nike also announced continues to aim for 100 percent renewable energy for owned or operated facilities globally by 2025 with a 10-year agreement to purchase renewable energy for its facilities in Oregon. The agreement with Avangrid Renewables will begin in January and include current and future world headquarters buildings, the In-House Manufacturing (IHM) facility in Beaverton, and nearly all owned or operated retail stores in Oregon.