Nike's priciest shoe yet: The $315 LeBron
For your money, you'll get motion sensors that measure how high you jump. The new model is part of the sneaker giant's plan to hike prices as consumer spending recovers.
The Wall Street Journal reported Tuesday that Nike's price increases are designed to reverse six straight quarterly declines in gross margins as raw materials, shipping and labor costs rise. Other sneaker companies are raising prices as well. Nike's $315 LeBron James shoe is set to debut in the fall and will feature motion sensors that can measure how high players jump. For that price, the sneakers should also guarantee that people who wear them can make a three-point shot.
Consumers are expected to flock to Nike's stores to snap up the LeBron X Nike Plus -- and that worries the Beaverton, Ore., company. It has made retailers such as Foot Locker (FL) and Dick's Sporting Goods (DKS) forgo releasing "hot" sneakers at midnight and will no longer permit them to pre-sell or take reservations for new shoes.
Shares of Nike have barely budged this year. Wall Street had been down on the stock since the company reported disappointing quarterly results, along with many other consumer products companies, amid worries about slowing growth. Activist investor William Ackman has taken a position in Procter & Gamble (PG), the world's largest consumer products company, for that reason. That view, however, may be changing.
Consumer confidence, which had been faltering, rose unexpectedly in August, even though the unemployment rate also edged up and wages remained stagnant. Will that mean more consumers will buy expensive Nikes and other name-brand consumer goods? Perhaps.
Wall Street analysts have an average 52-week price target on Nike of $105.40, about 10% above where it trades now. Sales in the current quarter are forecast to rise 5.5% to $6.4 billion. Under Armor (UA), a maker of trendy athletic apparel, is expected to do much better, posting $575.12 million in revenue in its current quarter, a 23.5% gain.
But there are limits. As Bloomberg News notes that births fell to an 11-year low in 2011 amid worries about the economy. Wall Street expects flat revenue growth at P&G for the next two quarters.
Nonetheless, resurgent consumer spending would be good news for President Barack Obama's re-election efforts. The economy is the main issue in the campaign. GOP challenger Mitt Romney will have a tough time arguing that voters are worse off than they were four years ago if many of them are clad in trendy exercise clothes and high-tech sneakers.
Jonathan Berr does not own shares of the listed companies. Follow him on Twitter@jdberr.
losers will be selling their food stamps for these.....What a joke!, then bitchin because they can't find a job....or wait, no they'll just plan on pushin out more kids to get more welfare...
Wow!!! I am so glad that our whole economic picture will improve simply because of these WAY over priced shoes. Someone should of thought of $300 shoes way before now. If they are anything like the $125 Lebrons, whoever buys them will regret they did not buy gas or groceries or more modestly priced shoes when these "junk heaps" fall apart in a few months. Maybe Barack will have all the delegates and speakers at the convention wear these LeBrons to demonstrate Nike's ability to singlehandedly bring our economy back from the edge.
I can't afford $315 shoes because I cannot afford $3.50 per gallon gas. My family is in no way better off than we were 4 years ago (a really strange, but really really "objective" summation of this article Mr. Berr........please!!).
$315 for sneakers????? I thought it was bad when I was spending $160 on a pair... Then I started with my good ol' Payless sneakers. They only last a few months but I'm not ready to kill someone for stepping on them or beat myself up for scuffing them. This is crazy and I don't think many ppl will be able to afford these especially as gas prices rise and rise in food costs and other expenses. Nike might have checked itself out.
Just tells you about the uninformed in our country. Let's see Nike stock today is $96.00/share.
Do the math and save a little to purchase 10 shares of Nike. But naaaaay we want quick gratification...you can't OD on the sneakers but they might as well be a drug.
Geeez Sampars and Agassi must be shaking their heads....Tennis's BEST would of never
endorsed a shoe for this much money.
MORE ON MSN MONEY
Copyright © 2013 Microsoft. All rights reserved.
Quotes are real-time for NASDAQ, NYSE and AMEX. See delay times for other exchanges.
Fundamental company data and historical chart data provided by Thomson Reuters (click for restrictions). Real-time quotes provided by BATS Exchange. Real-time index quotes and delayed quotes supplied by Interactive Data Real-Time Services. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by SIX Financial Information.
In the never-ending contest for sales, American carmakers are pulling ahead.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.