Nike, Inc (NYSE: NKE) is a worldwide leader in athletic apparel. The famous swoosh logo was created in 1971, nine years before the company went public. If you had invested $1,000 during Nike's initial public offering (IPO) without reinvesting dividends, your investment would be worth $729,575 today. This represents a compound annual growth rate (CAGR) of just over 20.7%.

History of Nike

Nike began as Blue Ribbon Sports in 1964. Co-founder Phil Knight created the name in 1963 shortly before a meeting with a Japanese shoe manufacturing company. Knight was representing a company he hadn't even started yet. Blue Ribbon Sports sought to find lighter and more durable shoes for runners.

Blue Ribbon Sports co-founder Bill Bowerman created the first Nike shoes, the waffle trainers in 1971. While making waffles, Bowerman thought the pattern would lead to increased grip for runners. Nike paid $35 for the creation and design of its swoosh logo from Portland University student Carolyn Davidson. She was later given a swoosh ring and stock in the company for her contribution.

In 1972, Nike signed its first athlete endorsement contract with tennis professional Ilie Nastase. Athletic endorsement deals would prove to be an essential part of the Nike marketing strategy going forward. In 1981, Blue Ribbon Sports officially merged with Nike, Inc.

Rise of an Empire

Nike's move into basketball was aided by the endorsement of Michael Jordan in 1984. Its signature shoe, the Air Jordan, was initially banned by the National Basketball Association (NBA), drawing a wave of free publicity to the company. In 1986, Nike revenues passed $1 billion for the first time.

The success of Jordan's endorsement deal with Nike led to many other successful partnerships. Nike has signed endorsement deals with stars or teams from every major sport around the world. In 2011, the company secured a five-year contract with the National Football League (NFL) to be the exclusive provider of player apparel. The company continues to battle German rival Adidas for control of the international soccer market and has signed many top soccer players to endorsements. In 2015, the company is expected to spend more than $1 billion on endorsement deals. The company has recently faced the downfalls of endorsing so many individual athletes, such as the recent Tiger Woods and Oscar Pistorius scandals.

Nike's famous "Just Do It" slogan was released in 1988. The first Nike store opened in 1990 in downtown Portland, Oregon. Nike's first acquisition was made in 1988 with the purchase of Cole Haan. Other acquisitions include Bauer Hockey, Hurley International, Converse, Starter and Umbro. In an effort to focus on its core brands, Nike began divesting companies in the late 2000s, selling Starter, Bauer Hockey, Umbro and Cole Haan.

Dividend Reinvestment and Splits

Nike began paying a quarterly cash dividend in 1984. Since 2004, the company began increasing the dividend on an annual basis. If you reinvested dividends on your same $1,000 investment during Nike's IPO, it would be worth over $4.4 million today. This would have increased your CAGR over 27%.

Nike's stock has split two for one six times. Your original $1,000 investment would have yielded almost 87 shares. Adjusted for the stock splits, you would hold 5,568 shares today without dividend reinvestment.

The Future

During its 2015 investor conference, Nike set a very ambitious goal of increasing revenues to $50 billion by 2020. Nike has plans to invest heavily in innovation and technology. Through its website and apps, Nike expects to see a seven-fold gain in e-commerce sales. Nike President Trevor Edwards stated, "We will be at the consumer's fingertips every day." Heavy investment is also expected in its women's business, which presents a large opportunity for growth.

With these innovations and investments, coupled with the company's commitment to shareholders by annual dividend increases, Nike will seek to continue its success with consumers and its stock price.

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