09 Apr Hi-tech running shoes help Nike, Adidas, say Credit Suisse analysts
Nike and Adidas are counting on new running shoe technology to continue their worldwide growth, Credit Suisse analysts said Monday.
And both brands are heavily promoting running shoes with advanced technology that will test consumers’ acceptance of $150 shoes.
Retailers have shown “little resistance” to the higher priced running shoes, research analyst Christian Buss said, noting that most running shoes are priced between $75 and $100.
“The challenge becomes whether or not new technologies are accepted by the consumer,” he said.
Buss, who follows Nike for Credit Suisse, participated in a conference call with Hong Kong-based analyst Eva Wang, who follows Li-Ning among six China-based footwear and apparel brands, and Rogerio Fujimoriof Credit Suisse, who covers European luxury goods, including the Adidas Group of Germany.
Wang said bloated inventory and aggressive discounting to reduce that inventory for all footwear and sportswear brands will persist throughout 2013.
“It’s more realistic to look to 2014 for a turnaround,” she said.
She noted that Nike and Adidas can claim about 50 percent of all revenue in sports footwear and apparel in China, up from 39 percent two years ago.
Regarding the higher-tech running shoes, Buss pointed to Nike’s Flyknit, with an upper that can be produced to a precise shape from a single thread. The production process can take place anyplace in the world and reduces labor costs, Buss said.
The shoe, depending on style, has been priced at $150 to $160.
The Adidas Boost, with a cushioning substance not found in other running shoes, has sold out in some parts of Europe in its limited introduction, Fujimori said.
He said it would be interesting to see if Nike could maintain its current revenue growth this year, considering there are no major sporting events like the World Cup or Olympics.
However, 2014 is a World Cup year, to be held in Brazil. And Nike will be helped in part because the company sponsors the Brazilian National Football Team.
Brazil already ranks among the top 10 geographic markets for Nike, Fujimori said.
“The second half of 2013 will be marked by (soccer governing group) FIFA building toward the World Cup,” he said.
— Allan Brettman