Nike's 40% Off Groupons Are a Sign of Its Troubles

Why Nike Is Taking the Discount Route

Nike Inc. hasn’t relied on discounts as much as rivals. The world’s biggest sports brand never really needed to -- until now.

Amid slowing demand in the U.S., the sneaker giant has announced a 48-hour sale of as much as 40 percent on more than 200 items on its website, including products from its premium Jordan brand. The lower prices were also advertised through Groupon Inc.’s site.

Source: Groupon

Matt Powell, an analyst for researcher NPD Group, called the event “unprecedented” in a post on Twitter. The sneaker industry “is going the way of the rest of teen retail” in needing discounts to sell products, he said.

The markdowns come as U.S. teens shy away from Nike and opt for rivals Adidas and Vans, according to a survey released this week by Piper Jaffray. Nike remained the favorite sports brand among upper-income teenagers, with 46 percent of respondents naming it. But that’s down from 51 percent a year ago. Affinity for Adidas nearly doubled to 11 percent and Vans, which is owned by VF Corp., gained 300 basis points to 12 percent.

The once high-flying U.S. sneaker and sports apparel industry’s slump has deepened this year. There’s more competition with non-sports brands selling athletic-looking gear. And after years of fashion trending toward sporty looks, tastes are shifting. Nike’s sales in North America fell 3 percent last quarter, and it forecast another decline for the current one.

Nike’s stock is down 2.7 percent over the past 12 months. But that’s better than other key players. The shares of Under Armour and Foot Locker have fallen more than 50 percent in the same period, making them the two worst performing stocks in the S&P 500.

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