Nike's SG&A spending trends indicate the company aggressively targeted marketing opportunities surrounding the Olympics; SG&A in the last four quarters has totaled more than $6.4 billion, compared to $5 billion in the fiscal year ending in 2007. This spending increase far outpaced sales growth, and is one reason operating margins -- which peaked in 2006 above 14% -- have since fallen to 10.5%. Many companies that retail Nike's products, like Dick's Sporting Goods (NYSE: DKS), are reducing merchandise inventories across the board to conserve cash. Still, some analysts are counting on tight cost controls to offset lost profits from a sluggish economy, with estimates for 2010 EPS as high as $4/share.

Macro headwinds aside, Nike does have several strengths: immense brand value, global growth opportunities, and a dominating position in the athletic footwear market. On their earnings conference call last month, Foot Locker, Inc. (NYSE: FL) CEO Matthew Serra said, "The strength of our men's and kids footwear business in the U.S. continue to be in the higher priced marquee basketball category with strong sell-throughs of weekly Nike and Jordan launches."

Will Nike's traditional strengths be sufficient to see it through tough times? Sam Poser, Senior Research Analyst and Vice President at Sterne Agee, wrote that the Nike brand "appears to be undergoing a major transition" in a June 10 research note. "To offset the lack of major attention grabbing technology, Nike has begun to battle for share, often at the long term detriment to the brand," he continued. Poser has a "sell" rating and $43 price target on Nike shares.

James Cullen also edits and writes at CollegeAnalysts.com. He has no position in the stocks mentioned above.