Daily Management Review

Resell Value For Nike Air Jordans Is Declining. Is The Culture Of Sneakers Changing?


Resell Value For Nike Air Jordans Is Declining. Is The Culture Of Sneakers Changing?
Investors will be watching how Nike does when it releases its earnings for the crucial back-to-school shopping period on Thursday. The Jordan brand is an important source of revenue for the firm.
According to data from analytics company Altan Insights, some Jordan sneakers have lost value on the secondary market while On Running and other sneaker labels have seen explosive increase. Nike's Air Jordan 1 Retro peak, long regarded as the ultimate collector's shoe, has seen a decline in the average premium paid on the resale marketplace StockX, falling from a peak of 61% in 2020 to 4% in 2023.
For example, the "True Blue," "Skyline," and "White Cement" colorways of the Air Jordan high-tops introduced this year are now being sold at a discount rather than the $100 or more premium that they were sold on StockX over Nike's retail price. The Jordan brand, a significant source of sales for Nike, may be "losing steam," according to Bernstein analysts on Sunday.
There were no comments on the topic available from Nike.
Jordan is "well on its way to becoming the second largest footwear brand in North America," CEO John Donahoe told investors in June, with growth of more than 30% in the upcoming fiscal year.
The percentage of overall revenues attributable to the Jordan brand is not disclosed by the corporation. However, in wholesale, Jordan brings in about 16% of Nike's sales, increasing 29% from the year before, according to its fiscal 2023 annual report.
Results for the first quarter of the company's fiscal year 2024 will be released, and Nike predicted in late June that they would fall short of Wall Street estimates since North American customers are still holding back on discretionary purchases like footwear and clothing.
Although analysts claim that resale prices can gauge consumer sentiment towards a brand and the overall demand for discretionary products, sales on StockX do not immediately affect Nike's revenues. Although other brands, such as running shoe manufacturer Asics and the French-owned sports shop Salomon, are posting greater year-over-year sales growth on StockX, Nike continues to rank among the top five most popular sneaker brands.
The demand for "performance running" shoes from companies like Deckers-owned Hoka has increased in recent quarters, while sales of "lifestyle" sneakers worn every day, such canvas skate shoes, have decreased.
According to Donahoe in June, sales of Nike's Jordan brand performance shoes had also exceeded those of throwback models like high-top Air Jordan 1s.
That was a significant change from 2020 and 2021, when strong demand for Nike's lifestyle trainers combined with constrained supply due to pandemic-related supply chain snarls guaranteed excellent sell-through, according to Dylan Dittrich, head of research at Altan. Nike could then anticipate both consumers and resellers snatching up available inventory, which was evident in the high premiums for Nike models on resale marketplaces like StockX.
Nike has recorded decreased growth along with the decline in resale premiums. The crucial North American market saw sales grow 5% in the four months that ended on May 31, which was the smallest growth in the previous four.
According to Apptopia data from Barclays, Nike app downloads for the first quarter of the fiscal year were down 18% from the same period last year, which is the greatest decline since mid-2019. Daily average users also down 2% year over year.
According to Jessica Ramirez, a senior research analyst at Jane Hali & Associates, some investors are concerned that Nike's innovation has not kept up with newer companies gaining share in the U.S. market as consumers turn to running shoes.
"They are still chasing that," she said. "The space within the sport has gotten extremely competitive and shoppers now have a lot of good brands to choose from."
Donahoe highlighted upgrades to current designs, like as its Infinity road running shoes and Pegasus trail running shoes, when he informed investors that the company had "reset" its running business in June.