Marketing expenses take a deep bite into Nike's shrinking profit margin

Marketing splurge derails Nike’s quarterly profits

Nike has come up short in its latest estimate of quarterly profits as the sportswear giant splashed out on a number of major marketing initiatives and product launches.

Total net income fell to $989m in the fourth quarter, down from $1.14bn recorded a year prior, as Nike sought to drum up interest in its goods by engaging the services of high-profile celebrities, associating with major sporting events and accelerating product development of its Jordan sneaker brand.

In recent months this has seen Nike sign up NFL backer Colin Kaepernick for its ‘Dream Crazy’ advert as well as Raheem Sterling to head an anti-racism campaign, which appeared to buoy sales in the short term.

This was on top of its sponsorship of the Women’s World Cup, the benefits of which may be more obvious down the line. This presents a massive opportunity for brands in the coming years to grow their share of the women's apparel market.

All in all, it would have expected better results on the 30th anniversary of its iconic 'Just Do It' strapline.

In all these activities created a sizeable dent to its bottom line as costs ballooned by 10% to $12.7bn over the quarter. Despite these outlays revenues rose 4% to $10.18bn, ahead of analysts estimates of $10.16bn.

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