The threat of UA basketball shoes to Nike has subsided, and sales will significantly increase
From：
Guangdong Shoe-making Machinery Association
Post date：
2024-01-08
After Nike announced a new direct sales model on Amazon and Instagram, in early July, Wall Street analysts expressed optimism about the actions of American brands and expected their stock prices to rebound significantly this year.
Recently, Nike has once again been favored. On July 21st, Jay Sole, a renowned Morgan Stanley analyst at the investment bank, believed that the sales of sports giant brands would significantly increase in the coming months. Nike's rating was upgraded from a wait-and-see position to an overweight position, and its target stock price was raised from $56 to $68, indicating that its increase may reach over 17%. The reason for this is that the analyst's judgment is based on three considerations. The primary factor is the comprehensive release of the innovative Air VaporMax series, which is expected to bring in sales of $1 billion. Secondly, the trend of retro fashion is fading, with sales of last year's best-selling Adidas Stan Smith and SuperStar series expected to decline. In addition, analysts emphasize that Under Armour Curry products, which have swept the market, are no longer a threat to Nike.
"We believe that the window period for buying Nike stocks at the bottom of the cycle is nearing its end," Morgan Stanley wrote in a report on Wednesday. "Nike's new products, such as the Air VaporMax, and the improvement in Nike's market capabilities are faster than expected and will reverse the downturn it has experienced in the past 18 months."
Nike's Key Innovation Product of the Year Air VaporMax
In the past year and a half, American brands have experienced a downturn in performance growth, rating downgrades, and stock price setbacks. During this period, investors were concerned that Nike, which had no breakthrough products in almost two years, had lost its innovation advantage. Until March 26th of this year, Nike celebrated its annual Air Max Day with the official release of the protagonist shoe, the Air VaporMax. This pair of research results, which took seven years to complete the air cushion reform, finally emerged as a "timely rain" and is considered the key for American brands to turn their decline in product development.
It has been nearly four months since the release of the shoe model, and the official statement about the sales of the Air VaporMax has been reported by commercial media CNBC. Nike's only statement is that consumers have responded "very positively" to this product. Analyst Jay Thor said that after communicating with industry insiders and retailers, it is expected that this innovative product will bring in sales of $1 billion. Meanwhile, he estimates that Nike's North American market sales will increase by approximately 5% year-on-year in the next quarter, and market concerns about the brand are decreasing.
On the other hand, the previously popular retro fashion trend is showing signs of fading, and the trend in the sports shoe consumer market is quietly shifting. Last year, Adidas' sports street collection Adidas Originals business grew by as much as 45%, with its retro shoe models Stan Smith and SuperStar becoming sales champions, driving its North American market share to double. This trend once caught Nike off guard with its sports oriented features.
Just as fashion trends always change rapidly, Jay Thor said that in fact, the retro trend of sports shoes has declined in popularity this year, and he even used the term "aesthetic fatigue" that consumers have already experienced. Although the new trend is not yet clear, including Nike Air VaporMax and Adidas Ultra Boost, a range of shoes that balance lifestyle and technological innovation may see significant breakthroughs.
In addition to the shift in market trends, analysts specifically mentioned Under Armour, a new American luxury brand, "The market threat brought by Stephen Curry's products is disappearing."
In 2013, Under Armour stole Nike's attention after signing with Curry. With the popularity of Curry boots, the brand has increased its previously non-existent market share in the US sports shoe market to 10%, even surpassing Adidas to become the second largest player in North America. However, due to the lack of breakthroughs in product technology and exterior design of the third-generation combat boots, coupled with the cooling down of Curry's performance and exposure on the field, Under Armour can only achieve a poor sales performance.
Analyst Jay Thor emphasized in his report that the company's sales have decreased by about 60% compared to the same period last year. Another factor that makes Under Armour difficult to pose a threat to Nike is that this new luxury brand previously gained market share by selling Curry boots slightly lower than similar Nike products. Now, the latter has solved this problem by lowering prices.
Although Under Armour may not be able to regain market focus in the short term, it is worth noting that American brands that previously focused on professional sports are doing their best to launch a sports lifestyle product category to respond to market trends. Not long ago, they found rapper A $AP Rocky to sign an endorsement contract, a boy who grew up in Harlem, New York and has a strong market appeal. It is reported that Under Armour will also recruit more fashion designers to expand its product line.
Obviously, unable to defeat giants with Curry and professional basketball shoes, Under Armour is trying to win the market through popular singers and lifestyle products. For this sports brand that lacks a fashionable lifestyle gene, this is a challenge that must be accepted.
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