It has been announced that Nike will be reducing the supply of some of its popular sneakers, such as the Air Force 1 and Pegasus models, in order to shift its focus towards other products. The decision was made as part of the company's strategy to address its underperformance, with CEO John Donahoe acknowledging the need for significant adjustments during a recent earnings call.
This year, Nike is placing emphasis on the upcoming launch of the Air Max Dn, a cushioned athletic shoe set to debut next week. The Air lineup, described by Donahue as a 'double-digit billion dollar business,' will feature shoes worn by athletes at the upcoming Paris Olympics. Donahue himself highlighted the comfort and uniqueness of the new Air Max Dn during the earnings call.
In addition to the Air Max Dn, Nike is also working on the development of the Pegasus 41, a next-generation version of its popular running shoe. The Pegasus 41 is expected to be released later this spring, showcasing the brand's commitment to innovation and product evolution.
Nike's decision to revamp its product offerings follows criticism from analysts who deemed its existing lineup as 'stale' last year, prompting a reassessment of the company's direction. The sportswear giant, along with competitors like Adidas, is facing challenges due to a decline in sneaker demand, particularly in regions like Europe and China.
Footwear remains a key revenue driver for Nike, accounting for $33.1 billion in sales in its last fiscal year, significantly surpassing revenue from apparel and equipment. Despite its strong performance in footwear, the company cautioned investors about a projected low-single-digit revenue decline in the latter half of 2024, citing economic uncertainties and a slowdown in consumer demand.
Following the announcement, Nike's stock experienced a 5.2% decline in after-hours trading in New York, reflecting investor sentiment towards the company's strategic shifts and future outlook.
