Sportswear giant Nike said Friday it will start selling sneakers for under $100 after its shares plummeted following dismal sales forecasts.
The company announced new plans to boost profits after telling analysts in its quarterly earnings report on Thursday that revenue will likely decline in fiscal 2025.
The forecast of an unexpected mid-single-digit decline in full-year sales reinforced investor concerns about the pace of Nike’s efforts to halt market share loss to upstart brands such as On and Hoka.
Nike shares plummeted 20% on Friday, to $75.37, its worst day on record and its lowest closing price since March 24, 2020.
“Nike shares will likely remain in the so-called penalty box until new product innovation really starts to emerge and management regains investor confidence,” Wedbush analyst Tom Nikic said in a note.
Customers are hesitant to spend big amounts as they battle persistent inflation and the rising cost of living.
“This is likely an attempt to capture price-sensitive consumers,” GlobalData analyst Neil Saunders said, referring to the new sub-$100 line.
Nike has increased the prices of its trademark Air Jordan 1 sneakers in recent years, which now sell for between $150 and $200.
Meanwhile, rival Adidas sells its trendy Gazelle sneakers for $120.
But sales excluding the impact of currency fluctuations were flat for the quarter ended May 31, missing analysts’ expectations of a 1.6 percent increase in sales.
The company’s sales increased 1% over the past 12 months, but excluding the pandemic-related decline, that was the slowest growth rate Nike has seen in more than a decade.
In its quarterly earnings report, reported by The Wall Street Journal, the company said its net income rose 45%, due in large part to cost-cutting measures such as job cuts.
The disappointing quarterly sales could be blamed on a sudden shift from wholesale to direct-to-consumer sales and a lack of innovative sneaker offerings from the world’s largest sports apparel company.
Nike discontinued sales of its classic Air Jordan 1 shoe to make room for new product releases, which also hurt the Oregon-based company’s digital sales, Chief Financial Officer Matthew Friend said during the quarterly earnings call.
Adidas shares were down 0.80%, Puma shares were down 2.6% and British company JD Sports was down 3% in after-hours trading on Thursday after Nike released its quarterly results.
Nike is looking to compete with more affordable rivals such as running-shoe brand Hoka and Roger Federer-backed On.
Friend said Nike is “looking at opportunities at all price points.”
“This is an area where they can be more competitive in the short term,” Joseph Sivero, an analyst at Truist Securities, told Reuters.
