The Nike Scouting Report: Strong on Gadgets, Watch the Head

Management

Photograph by Issac Baldizon/NBAE via Getty Images

Age: 45 Position: Apparel Decathlete Measurements: 38,000 employees, $64.8 billion market cap Stats: $25.3 billion annual sales, $2.5 billion annual profit(Notes compiled Oct. 9 as the player ran some drills for investors)

StrengthsNorth America: While many considered the U.S. fully developed, drummed up an additional $4 billion in North American sales in the past three years, in part because it tends to run in lockstep with the U.S. economy as a whole. Some 41 percent of its revenue now comes from the region, up from 35 percent in 2010.

Hoops: Nike is profiting from a basketball renaissance, thanks to LeBron James and a crew of other exciting young players. "We haven't seen this level of excitement for the game since the days of Jordan, Barkley and Pippen in the 1990s," said Jayme Martin, general manager of global categories. Nike was quick to bring James onto its design/sponsorship team (where Michael Jordan has been for decades). The company expects an additional $1 billion in annual basketball-related sales over the next four years.

Running: Nike started as a running company and is just now hitting a record pace after almost five decades. Sales of its running gear have grown by 26 percent a year since 2010, more than double the pace of the company on a whole. What's making the difference? Its new lightweight Flyknit sneakers and a burgeoning apparel line.

Gadgets: Keeping score matters; even on just a run around the block. Nike has lured 20 million people onto its ecosystem of digital performance metrics. The company's Nike+ platform has given rise to a bevvy of apps and a new line of gear, including Smartwatch and Fuelband. Another 15,000 people are signing up daily and the company said its proprietary points system of measuring activity has become "the currency of movement."

Trick plays: For a big player, Nike is proving surprisingly agile and creative. Socks, for example, have become a $100 million business for Nike. Who thought kids would save their lawn-mowing bucks for a $35 pair of socks? Another surprise score: Russia. The host country for the upcoming Winter Olympics is already one of Nike's fastest-growing markets, with close to $1 billion in annual sales.

WeaknessesWomen: Nike has clearly been schooled a bit by relative newcomers like and Athleta. Women's apparel and shoes only account for one out of every four of Nike's sales dollars in North America

China: Watch the head-fake here. Nike talks about "huge potential" and how passionate Chinese people are about sports. But Nike's China sales dropped last year by 3.4 percent. Yesterday, it said it is "resetting" in the country by focusing sales on specific cities. Take a lap.

Digital: Nike talks a big online game, but it didn't launch a web portal in Brazil until last week, which seems late, considering Brazil is on the cusp of being the company's No. 3 market. And in Japan, where it garners almost 4 percent of its sales, Nike's web store won't go up until next month. Last year, only 2 percent of its sales came from its web platform, a metric it hopes to push to 6 percent by the end of 2017. The e-commerce field is still pretty wide open, but Nike could stand to pick up the pace online.