NIKOSA, Nigeria — As Nike and its global rivals are struggling to keep up with the rapid growth of their apparel brands, Nike has found itself stuck in a bind.
The U.S. footwear giant has been buying up footwear brands in recent years as it seeks to cut its huge costs and cut out a growing share of its sales from overseas.
“We have to figure out how to balance between what Nike wants us to do and the fact that we have to keep buying our way out of it,” said Steve Fong, Nike’s senior vice president of footwear.
Nike bought more than half of its footwear business in the U.K. in 2015, after spending more than $4 billion to expand into China.
It has now added about $2.7 billion to its portfolio, most of it through sales of apparel and footwear.
The retailer said on Thursday that it was the largest single buyer of footwear in the world for the first time in its history, surpassing $2bn.
It has long been known for its high margins and low costs.
In a separate announcement, Nike said it was also working to sell more than 1.3 million pairs of shoes in China.
Despite the rapid changes in the market, Nike expects its share of sales to fall as more companies try to get a better grip on the demand for its products.
As the global retail landscape shifts to more physical retail, there is a growing sense of urgency for the retail giant to get back on track, said Fong.
Last year, Nike estimated that it would need to sell $6 billion in footwear a year in order to keep pace with the growth of the apparel market.
For now, the retailer is on track to achieve that goal, with sales of its products increasing 9% in the fourth quarter from the year before.
Although Nike is continuing to expand its footwear portfolio in China, it is expected to continue to sell to a growing number of companies, including brands such as Adidas and Under Armour.
Fong said the company has a lot of flexibility to decide how to go about selling to new customers.
“We are going to try and do a good job in getting that right.
And if we do that right, we will be able to compete with the likes of Under Armour,” he said.
But the company is also facing stiff competition from Nike’s own Chinese rival, Tencent, which has said it wants to become a bigger player in the footwear market.
The world’s largest mobile game company said last year it was investing $1 billion in its own China retail operations, including expanding its presence in Shanghai and Guangzhou.
Shares of Tencent rose 5% to $3.54 on Thursday.
Tencent has also expanded its distribution network in Asia and plans to invest more in its retail operations in Southeast Asia, according to the company.