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.
At $315 the only ones wearing them are going to be the drug dealers and the thugs robbing the hard working people who can't afford to buy these sneakers!!!!!
These shoes are fashon, not 'sneakers'. No one complains about or (racistly) insults the buyers of 300+ dollar Italian loafers, or cowboy boots.
Now, I'd never buy them (or any Nikes). They're over priced, out of my budget range, and totally not my style. But, the point is they are fashon statements for the people who do like them. Would you play a game with these on? Letting them get all scuffed and grass stained? Again, NOT sneakers.
About the economy slant to this article...yeah right, even if the economy is really improving, no one other than the already rich and/or foolish are going to buy lux items like these now.
This irritates to no end! I own a business. I make VERY good profits (which is what I make after everything is paid that i owe) , so wildfires and international issues that affect the price of oil cause me to make less profit. I already am used to exploiting other people to get these huge profits and I don't want to make 33 million less dollars throughout this year, so A.) I do the best I can with the intelligent minds I have hired, B.) Maybe close a few facilities that are overseas and maybe open a few smaller facilities over here ( i know the workers get paid more, but at least these workers or their kids might buy some of my product with the money that I put into the communities) That will ease shipping costs and tariffs. or C.) I raise the prices of my products, all the while still exploiting people for those huge profits that have to rise instead of fall. ( <<< lol...ok)
Sorry, Nike I don't play ball anymore, but I have three children two of which are boys, (my daughter also likes soccer) They ask me why I don't buy them Nike products....I just tell them I don't support exploitation. I don't support economic engineering of a poor starving country, and, when I look at their bright, shiny faces, and I compare them to the ones I have seen in videos about sweatshops and they aren't bright at all. They are covered in sweat and filth all for some "big shot" to make his profits. I tell my kids, "No." I have been telling corpses (my short for corporations), "No!" , for a while now and I will continue. I hope others will to. I hope other people make this new "business model" of Nike a joke. I hope it doesn't work at all.
Do they make you run faster than a speeding bullet, are they more explosive than a locomotive, make you leap tall buildings in a single bound, look, it’s a bird, no it’s a plane, no, it’s a fool if you pay $300 plus for those shoes.
MORE ON MSN MONEY
Copyright © 2013 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. 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 Morningstar Inc.
The cosmetics company's disappointing earnings report is yet another illustration of how difficult the retail sector has become.
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.