By Aishwarya Venugopal and Ananya Mariam Rajesh
(Reuters) -Nike will launch new sneakers priced at $100 or less in countries around the world, its chief financial officer said on Thursday, as the sportswear giant overhauls its product line in a plan aimed at recovering sales.
Nike (NYSE:) has significantly increased the list price of its high-end Air Jordan 1 sneakers in recent years. The shoes currently sell for up to $200 at some retailers, including Nordstrom (NYSE on Nike.com.
Meanwhile, high-end Air Force 1 sneakers sell for about $150 on Nike's website. By comparison, the black and white three-stripe Samba sneakers and the multicolored Gazelle from competitor Adidas (OTC:) are priced at $100 and $120 respectively.
Nike stock plummeted on Friday, ending the day down 19.98%, the largest one-day percentage drop in the stock's history. The company on Thursday reported a surprise drop in sales in its latest quarter. Nike has seen slow sales growth as it battles competition from Adidas, as well as brands such as On's Hoka and Deckers.
Executives also pointed to softer traffic at their factory stores selling discount shoes and clothing, highlighting the growing pressure felt by the value consumer.
“This is likely a bid to capture some of the more price-sensitive consumers,” said GlobalData analyst Neil Saunders, referring to the new line of products priced at $100 or less. Nike Chief Financial Officer Matthew Friend told investors Thursday: “Our teams are also taking advantage of opportunities across all price points.”
Americans are cautious about spending, especially when it comes to products that are a luxury or non-essential, like trendy sneakers. However, Hoka's Cloudflow 4 and Clifton 9 running shoes, which sell for $159.99 and $145 respectively, have been gaining traction among many shoppers.
Nike's competitors in the “affordable” category include Hoka and Roger Federer, analysts said. “That's an area where they can compete better in the near term,” said Joseph Civello, an analyst at Truist Securities.
Nike launching a new line could be a risky move for the company because its sales decline is worsening.
“It might work to a certain extent, but it doesn't address the broader problem of a lack of innovation” at Nike, a sponsor of the Paris Olympics, Saunders said.
Some key Nike styles have recently lost value on the resale market, where the resale price for the Air Jordan 1 Retro High OG is discounted by about 32% in May, according to Altan Insights, which studies the collectible sneaker market.
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