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.
MSN, this should be REALLY embarrassing that you have absolutely ZERO control over this. Aren't you guys part of Microsoft? And yet you cannot figure out some automated way to keep this garbage out of your comments?
Can you at least assign some interns to curb it and make it look like you have some clue how to run a website?
Seriously, how long has this been going on absolutely uninhibited? GET WITH IT!
$315 for a pair of shoes. Wonder how that breaks down.
$150 for LeBron.
$100 Nike CEO's and upper management.
$50.00 parts and material.
$14.50 to the store that sold them.
$0.50 for the kid that actually made them.
There's your new American dream under your corporate master job creators. Driving towards wage equalization between first and fourth world countries.
I think Nike should charge 2000 USD for them. It will bankrupt foolish people faster, Darwin at his best.
We can sit up here and comment a million times about these sneakers. However on their release date you can go to any mall in a predominantly black neighborhood across the US and I guarantee people will be in droves to buy them. Half of them can't read, half of them have kids who can't read, half of them are unemployed, half of them are drastically undereducated, half of them place no value on investments that will appreciate in the long run to have a foundation in line for their kids and future generations, half of them think that improving one's self and community any type of upward mobility is corny and only for white people...I can go on....but they'll have these sneakers on and fool themselves that they're 'that n***a' becuase they have em on. Instead of spending that $315 on maybe books or anything to advance themselves they'll sit there and say it's the white man's fault for not advancing.
And that's coming from a black man who used to work for Nike overseas in London.
315 they have lost their minds an anyone who buys em is a complete fool!!!
THIS EXORBITANT PRICE INCREASE FOR SNEAKERS IS GOING TO COST THE LIVES OF AFRICAN AMERICAN KIDS!!!! JORDAN AND LEBRON NEED TO TAKE A STAND AGAINST THIS!!!! #justwatch #smh
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.
The sneakers come with a cheap handgun to protect yourself against thieving hood rats.
Copyright © 2014 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.
Former CEO cuts his holding to 20% but says, 'the story in't written yet.'
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.