It’s not what you sell; it’s how much you sell it for. That’s a truth familiar to leaders of companies in innumerable industries, from electric cars to telecoms, where price wars have at various times wreaked havoc on profitability and market values. Investors’ brutal response to an outbreak of discounting in the world of sports shoes is worth watching for those peddling products that may soon experience price wars for the first time — such as AI.
Foot Locker owner Dick’s Sporting Goods this week slashed its forecast of sales growth and operating profit for the year, saying that during the past three months, the athletic footwear market had “got very promotional” — meaning brands such as Nike, which also sell to consumers directly, had hacked back prices, creating a race to the bottom.
What’s remarkable is how much the market hated this turn of events. Dick’s shares fell more than 30 per cent, shedding $5bn of value, or twice what it spent to buy Foot Locker last year in the first place. Other eruptions of price hostilities have elicited similarly negative responses. In March 2025, UK supermarket chain Asda said it would cut thousands of prices even though this would “materially reduce” profit: the resulting two-day sell-off incinerated 13 per cent of rival Tesco’s market capitalisation, with Sainsbury’s not far behind.