NEW YORK (TheStreet) -- Nike (NKE) - Get NIKE, Inc. Class B Report is always trying to find new ways to sell athletic footwear and apparel. And the place where it all happens is in its sports research lab at the company's Beaverton, Ore., headquarters.
Nike offered a peek into its lab on Tuesday by hosting a media event in New York City. There, you could see how Nike scans human bodies to improve the fit and performance of its apparel. Or you could meet "Hal," a copper mannequin that "sweats" and is used to test new moisture-wicking materials. The company is also developing a material to prevent rubbing and chaffing, which is expected to be launched in the spring of 2015.
Nike's product innovation stems from the studying of areas at the lab ripped straight from a high-school textbook -- biometrics, physiology and sensory perception. All the average Joe or Jane consumer sees at the likes of Nike's retail partners Dick's Sporting Goods (DKS) - Get Dick's Sporting Goods, Inc. Report , Macy's (M) - Get Macy's Inc Report and J.C. Penney (JCP) - Get J. C. Penney Company, Inc. Report are pants and shirts that intuitively wick away moisture post-workout or fit akin to a "second skin," which is a goal of Nike.
There is reason to believe the Nike Sports Research Lab is supporting the company's financials in three distinct ways -- stronger sales and future orders growth, and long-term profit margin expansion.
Over the past four quarters, Nike has mentioned "higher average prices" as one explanation for its year-over-year gross margin improvement. According to Bloomberg, Nike's gross margin fiscal year to date has tallied 45.2% compared to 39.3% in fiscal year 2002. Future orders growth, excluding currency adjustments, increased to 11% in the most recent quarter versus 8% just three quarters earlier.
TheStreet took a tour of the replicated version of the Nike Sports Research Lab at the media event.
An athlete is tested to learn how Nike's products are aiding, or hindering, performance.
All Nike apparel is tested on a copper mannequin named "Hal." Hal has 139 ports that simulate sweating, again as a means to test product performance. Using Hal also keeps Nike's costs down as "human testing is expensive", pointed out a company spokesperson.
Body scanning is done to get a precise product fit.