Nike plots $100 sneaker line as shares plunge in worst-ever drop

10:10 am Tuesday, July 02nd, 2024

(This June 28 story has been corrected to say that Nike is a sponsor of the US Olympic and Paralympic Committee, not the Paris Olympics, in paragraph 10)

By Aishwarya Venugopal and Ananya Mariam Rajesh

(Reuters) – Nike will roll out new $100-and-under sneakers in countries around the world, its chief financial officer said Thursday, as the sportswear giant tweaks its product lineup in a plan aimed at getting sales back on track.

Nike has significantly hiked the list price of its top-end Air Jordan 1 sneakers in recent years. The shoes currently sell for as much as $200 at some retailers including Nordstrom on Nike.com.

Top-end Air Force 1 sneakers meanwhile sell for about $150 on Nike’s website. In comparison, rival Adidas’ three-striped white and black Samba and multi-colored Gazelle sneakers are priced at $100 and $120 respectively.

Nike shares slumped Friday, ending the day down 19.98%, the biggest one-day percentage drop in the stock’s history. The company on Thursday reported a surprise sales decline in its latest quarter. Nike has seen sales growth slow as it battles competition from Adidas, as well as the likes of On and Deckers’ Hoka brand.

Executives also flagged softer traffic in its factory stores that sell discounted shoes and clothing, highlighting increasing pressure being felt by the value consumer.

“This is likely a bid to secure some more price-sensitive consumers, GlobalData analyst Neil Saunders said, referring to the new $100-and-under line. Nike CFO Matthew Friend told investors on Thursday “Our teams are also attacking opportunities across price points.”

Americans are cautious in their spending, especially when it comes to nice-to-have, or non-essential, merchandise like trendy sneakers. However, rival Cloudflow 4 and Hoka’s Clifton 9 running shoes, which sell for $159.99 and $145 respectively, recently have been making the cut with many shoppers.

Nike’s competitors in the “affordable” category include Hoka and Roger Federer backed-On, analysts said. “That’s an area that they can compete in better in the near term,” said Truist Securities analyst Joseph Civello.

Nike’s roll-out of a new line could be a risky move for the company because its sales decline is worsening.

“It might work to a degree, but it does not remedy the wider problem of a lack of innovation” at Nike, a sponsor of the U.S. Olympic and Paralympic Committee, Saunders said.

Some key Nike styles have recently lost value on the resale market, where Air Jordan 1 Retro High OGs resale price is at a discount of about 32% as of May, according to Altan Insights, which studies the collectible sneaker market.

(Reporting by Aishwarya Venugopal and Ananya Mariam Rajesh in Bengaluru; Editing by Anna Driver)