AP Online
02-10-1999
Nike Splits With Italian Nat'l Team
BEAVERTON, Ore. (AP) -- Nike has parted ways with the Italian national soccer team, the company announced Tuesday.
In a meeting with Wall Street analysts, Nike officials informed the group that it will no longer sponsor the team, a deal that was costing Nike $15 million a year.
While losing the sponsorship of a powerhouse soccer team such as Italy would have been unthinkable for Nike in past years, the announcement drew praise from Wall Street analysts, who say the move is evidence Nike is serious about cutting costs.
Tom Clarke, Nike president and chief operating officer, told analysts that the Beaverton company will return to sales growth in its 2000 fiscal year, which begins June 1.
``We're poised to have steady improvement,'' Clarke said. He did warn, however, that the turnaround will be slow and steady. ``I think we have to be clear: We're not going to explode into revenue growth.''
Ongoing fiscal discipline is key, executives said. Forgoing a continuing relationship with the Italian team, seen as a jewel of the company's soccer sports marketing program, is proof of that, said Ian Todd, Nike's vice president for sports marketing.
``This is definitely a new Nike,'' analyst Dana Cohen said.
Nike has cut its selling, general and administrative costs from $2.8 billion in its 1998 fiscal year to $2.4 billion in 1999.
The cuts included eliminating staff and moving headquarters of Nike's Asia-Pacific main office from Hong Kong to Beaverton for a savings of $150 million. The company could trim another $50 million through a new procurement system that reduces the number of Nike's suppliers.
Nike has also cut back on filling new positions and taken to paying lower fees for athlete endorsements.
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