The world's largest athletic shoe and clothing maker, known globally for endorsement deals with such athletes as golfer Tiger Woods and basketball star Kobe Bryant, as well as the Brazilian national football team, signaled its cost-cutting mode late Tuesday by announcing it would cut up to 1,400 jobs, or 4 percent of its workforce.
Nike's reining in ad spending, sports sponsorships and endorsement deals was not only likely, but could be done without hurting its dominant position, analysts said.
"They have such penetration in their marketing budget that they can use attrition to cut off contracts," Robert Boland, professor of sports management at New York University, said of Nike's various sports contracts.
"You'll definitely see a different allocation and you'll definitely see some reduction," he added. "When you're the biggest, you have the power to do that."
"As part of restructuring our business, we're analyzing all aspects of our costs, including sports marketing contracts, advertising and brand marketing, to ensure we're spending resources wisely and focusing on the business opportunities that will have the biggest impact," Nike spokesman Derek Kent told Reuters.
"There are opportunities for reductions in endorsement contracts and we are evaluating them on a case-by-case basis," he added.
"They still want to uphold the spending on their marquee athletes, but there are opportunities to cut back on the secondary and tertiary type athletes or even teams that perhaps didn't really captivate or drive eyeballs to the brand," said Stifel Nicolaus analyst Tom Shaw, who rates the stock "hold."
"Nike's sports marketing strategy looking backwards was a little bit more free-spending than it will be moving forward," said Paul Swangard, managing director of the Warsaw Sports Marketing Center at the Univ
