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Jun 10, 2009
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Adidas keeps marketing spending stable

By
Reuters
Published
Jun 10, 2009

HERZOGENAURACH, Germany, June 10 (Reuters) - The world's second-largest sports goods maker Adidas (ADSG.DE) plans to keep marketing spending stable despite the global downturn, contrasting moves at bigger rival Nike (NKE.N).


"Every team needs the spark" - Adidas

"We will continue to spend about 13 percent of our (annual) net sales on marketing," said Adidas Chief Executive Herbert Hainer at a press conference on Wednesday 10 June.

The global recession has hit industry bellwether Nike, runner-up Adidas as well as Puma (PUMG.DE) in recent months and all three have launched broad cost cutting programmes to offset a downturn in consumer spending.

At Nike -- experienced in multibillion dollar marketing blitzes -- cost-cutting efforts include reductions in marketing spending by focusing more on digital campaigns than on traditional media like television.

But Adidas said it sees marketing "as investment" and instead aims to save more than 100 million euros annually by cutting jobs, closing regional offices and potentially some of its stores.

In the run-up to the world soccer championship in South Africa next year, Adidas has also set its sight on digital campaigns, Bernd Wahler, chief marketing officer for sport performance at Adidas said.

Adidas shares were up 6.8 percent at 27.58 euros at 1441 GMT, outperforming a 1.6 percent gain in Germany's blue-chip DAX index .GDAXI.

MARKET LEADER

The group aims for record sales with soccer related products in 2010 of "clearly more than 1.3 billion euros ($1.83 billion)", Hainer said. Adidas is market leader for soccer products with a market share of 34 percent, followed by Nike.

"We are well positioned to further extend our market leadership in football again next year," Hainer added.

Adidas equips national football teams of for example Germany, Argentina, Spain and the 2010 world soccer championship host-nation South Africa.

Adidas shares trade at 13 times 12-month forward earnings, according to Thomson Reuters StarMine, which weights analysts' forecasts according to their track record.

That is a discount to Nike, which trades at a multiple of about 16, as investors remain wary of weak performance at Adidas' U.S. brand Reebok. Reebok posted an operating loss of 96 million euros in the first quarter. ($1=.7087 Euro) (Reporting by Eva Kuehnen; Editing by Hans Peters)

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