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Promotional foot race
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August 17, 1998: 6:44 a.m. ET
Major athletic shoe retailers are slashing prices and restocking stores
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NEW YORK (CNNfn) - Foot Locker, the largest of the athletic shoe retailers, is sprinting to keep its No. 1 spot.
The company this month began slashing sneaker prices -- on current models. In the past, only older styles or heavy inventory problems caused athletic footwear to be sold at less than full price.
Other athletic retailers are expected to follow. And that has trampled stocks for the major players like Finish Line, FootStar, and Just for Feet. Venator, the parent company of Foot Locker, also has seen an overall drop and has warned Wall Street of lower quarterly earnings.
One of the problems plaguing the $12.5 billion athletic shoe industry is that sneaker sales fall off in non-Olympic years. And expensive retail space dictates space for only the hottest styles.
Dana Telsey, retail analyst with Bear Stearns, said the athletic shoe retailers are at a fashion crossroads. "I think all of them are going to seek to restock their stores with different types of brands, whether it's Steve Madden or Nautica or DKNY footwear -- designer footwear brands," she said.
Moving out excess inventory is especially important to retailers because this is the beginning of the industry's most important season: back to school. And retailers want consumers to be paying full price for their shoes.
That puts premium brands like Adidas and Reebok in a tough spot. But perhaps the most vulnerable is Nike -- with a 45 percent market share, it has the most to lose.
Dana Cohen, retail analyst with Donaldson Lufkin & Jenrette, said many thought this would be a good year for Nike. "After a year of very difficult business for Nike, there was a sense that the U.S. business was starting to see a turn," she said. "The Foot Locker issues and the potential escalation of promotional activity by the retailers puts a question mark on that."
And that raises the question of a new margin structure for both retailers and premium brand manufacturers. But there's no question that the consumer wins in this promotional foot race. 
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Foot Locker
Nike
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