Our view: Nike makes $315 leap of faith
August 24, 2012 4:48PM
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Updated: September 27, 2012 11:02AM
The most significant economic indicator yet may be this: Nike is breaking the $300 limit on sneakers. It plans to market this fall its new LeBron X sneakers for $315.
How bad can an economy be when an apparel company confidently expects to sell a glorified kids’ shoe for more than $300 and people line up for hours to buy it?
The LeBron line began in 2003 with a retail price of $110 and has risen steadily to its current price of $250 for the PS Elite shoe. Somewhere, there might be a price ceiling at which resistance sets in, but Nike is betting it hasn’t reached it.
And Nike might be right. There had to be sobs of relief in Beaverton, Ore., when James won the National Basketball Association’s Most Valuable Player award, his Miami Heat won the NBA championship (the first of eight James has promised the city) and he took home Olympic gold in men’s basketball.
The Wall Street Journal reports that Nike has had six straight year-to-year quarterly declines in its margins. There’s nothing like a run on $315 shoes to help solve that problem, although the term “shoes” probably does the Lebron X a disservice. It’s more of a footwear system, embellished with a golden swoosh, with built-in sensors that measure the wearer’s leap.
In the past, there have been riots when new lines of basketball sneakers were introduced, often at midnight openings. Taking no chances, Nike has issued guidelines to its major retailers: The shoes will go on sale at 8 a.m. and stores cannot presell or take reservations for the shoes.
Nike’s price increases are rippling all the way down the sneaker chain. The price of Chuck Taylor All Stars is up from $45 to $50, and Adidas Superstars are up nearly 8 percent to $70. Basketball shoes generally are up 9.4 percent compared with a year ago.
If, indeed, we jump off that fiscal cliff in January, some of us will do so in style, but we wouldn’t count on the LeBron X measuring much of a rebound.
Scripps Howard News Service