Nike will start selling some sneakers that are priced at under $100 after its dismal sales forecast sent shares plummeting, the sportwear giant said Friday.
The company rolled the new plan to boost its bottom line after telling analysts that fiscal year 2025 sales will likely to decline during its quarterly earnings report Thursday.
The forecast for a surprise drop in annual sales by mid-single digits amplified investor concerns about the pace of Nike’s efforts to stem market share losses to upstart brands such as On and Hoka.
Nike shares plunged 20% Friday to $75.37 — its worst day ever and lowest close since March 24, 2020.
“Nike shares are headed for a stay in the proverbial penalty box until new product innovations actually start to manifest themselves and management regains investor trust,” Wedbush analyst Tom Nikic said in a note.
Customers are hesitant to spend big as the battle stubborn inflation and the high cost of living.
“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 hiked the price of its trademark Air Jordan 1 sneakers in recent years, which sell for $150-$200.
Meanwhile, competitor Adidas sells its trendy Gazelle sneakers at $120.
However, sales stayed flat on a currency-neutral basis in the quarter ending May 31, falling short of analysts’ expectations that sales would jump 1.6%.
The company’s sales grew 1% in the past 12 months, representing the slowest growth — excluding the pandemic drop — that Nike has faced in more than a decade.
Net income rose 45%, though this is largely due to cost-cutting measures like layoffs, according to the quarterly earnings call reported by the Wall Street Journal.
The disappointing quarterly sales could be due to a sudden shift from wholesale to direct-to-consumer sales and a lack of innovative sneaker rollouts from the world’s largest athletic apparel company.
Nike pulled back its classic Air Jordan 1s to make room for new product launches – but this also hurt the Oregon-based company when it came to digital sales, CFO Matthew Friend said on the quarterly earnings call.
After Nike’s quarterly report, Adidas shares fell 0.80%, Puma shares fell 2.6% and UK-company JD Sports fell around 3% during after-hours trading Thursday.
Nike is aiming to compete with some of its more affordable rivals — including running shoe-brand Hoka and Roger Federer-backed On.
Friend said Nike is “attacking opportunities across price points.”
“That’s an area that they can compete in better in the near term,” Truist Securities analyst Joseph Civello told Reuters.
