By Juveria Tabassum and Nicholas P. Brown
(Reuters) -Investors will zoom in on Nike’s marketing plans for the coming year when it reports results on Tuesday, after several sluggish quarters in which rivals have stolen market share and high tariffs have hit imported goods.
The company, in the midst of a turnaround under CEO Elliott Hill, showed an appetite for big-ticket ad campaigns in the year ended May – boosting its marketing spend to $1.63 billion, up 9% from the previous year – and next year brings one of the biggest sports marketing bonanzas of the decade: the World Cup.
Marketing plans around the Cup, which will be held next June in the U.S., Canada and Mexico, will be a main investor focus in the coming months, Morningstar analyst David Swartz said.
Tuesday’s call may also shed light on Nike’s ongoing efforts to weather crippling tariffs. Nike makes nearly all its shoes in Vietnam, China and Indonesia – countries that face high tariffs from U.S. President Donald Trump.
The company said in June that tariffs would add about $1 billion in costs, though it planned to reduce imports from China from about 16% to below 10%.
Nike’s marketing campaigns this past year were largely focused on reestablishing it as the go-to brand for serious athletes, a label that has eluded it in recent years. Nike needs to keep hitting that message, Swartz said: “We need to see some progress on returning to relevance.”
The World Cup has a scope matched by few sporting events, and Nike sponsors five of the top-10 FIFA-ranked national teams, including Brazil, France and England. Its selling and marketing expense is set to cross $5 billion in 2026, according to LSEG’s estimates.
Revenue for the August-ended quarter is expected to fall about 5%, compared with a year earlier, while gross profit margin as a percentage of revenue is expected to shrink by about 3.7%, according to LSEG data.
Nike has lost market share to younger rivals like On and Deckers’ Hoka, contributing to weak performance in recent quarters. Demand in major markets – especially China – has been choppy, as Nike tries to balance its wholesale and direct-to-consumer strategies. It has discounted some items as it works to clean out inventory.
The company has also struggled in women’s athleisure against competitors such as Lululemon. On Friday, it launched NikeSKIMS, in a highly anticipated partnership with Kim Kardashian’s label.
However, Swartz said it would take time to judge its success, as “tariffs may affect sportswear demand for some time.”
The broader global athletic footwear market – estimated to be worth about $183 billion this year – is forecast to grow to $258 billion by 2030, India-based market research firm Mordor Intelligence forecasts.
(Reporting by Juveria Tabassum in Bengaluru and Nicholas P. Brown in New York; Editing by Anil D’Silva)
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