March 21 (Reuters) - Nike ( NKE ) has increasingly

leaned on its iconic basketball shoes to boost sales, but as the

sportswear giant bleeds market share to newer brands, some

analysts and investors are wondering if that is a mistake.

The Jordan brand and best-selling styles such as the Nike

Dunk have long driven the company's sneaker sales but consumers

have new favorites in the market - On and Deckers-owned

Hoka that have grabbed more shelf space globally.

"If we do a post-mortem, maybe there's been too much

reliance on legacy or historical product," said Jim Tierney,

chief investment officer of Concentrated US Growth Equities at

AllianceBernstein, which owns Nike ( NKE ) shares.

Nike Air Jordan shoes, first produced for U.S. basketball

star Michael Jordan during his time with the Chicago Bulls, were

released in 1985. The sneakers soon became a global craze thanks

in part to ads featuring Jordan and filmmaker Spike Lee with the

tagline "It's gotta be the shoes."

Data from analytics firm Altan Insights, which studies the

collectible sneaker market, shows that Nike ( NKE ) doubled the number

of Air Jordan 1 Highs released through its SNKRS app between

2019 and 2023 and more than tripled the number of Nike Dunk Lows

released over the same period.

While Nike ( NKE ) does not report what percent of its total

revenues come from Jordan, the brand accounts for roughly 16% of

the retailer's wholesale revenues, according to Nike's ( NKE ) fiscal

2023 annual report - up 29% compared to the previous year.

But the growing popularity of newer brands such as On and

Hoka, as well as established sportswear players like New Balance

suggests the importance of Jordan sales has become a liability

for the company, analysts said. One problem is shifting consumer

tastes, according to Stifel analyst James Duffy.

On's market share at Dick's Sporting in the footwear

category increased to 8.2% in February from the 6.1% it had in

October 2023, while New Balance saw its market share rise to

5.4% from 4.6% for the same period.

This is in contrast to Nike's ( NKE ) Jordan whose market share at

the retailer has hovered over only 5% from October to February,

according to YipitData, which collates market share using email

receipt and transaction data.

In a Sunday note, Duffy wrote that "retro footwear trends

are shifting from court styles (in which Nike ( NKE ) is overweight)

towards chunky dad shoes and terrace styles." That has allowed

competitors such as New Balance and Adidas, with its

best-selling Samba sneakers, to draw shoppers who might have

otherwise turned to Nike ( NKE ) as a fashion choice.

Nike's ( NKE ) newer basketball shoe releases have not had the same

popularity with shoppers as its retro styles, according to Jane

Hali & Associates senior analyst Jessica Ramirez. Its newest

entry, the Book 1, named for NBA star Devin Booker, "did not get

a very good review and is a very casual-looking shoe" instead of

a performance-driven basketball shoe, Ramirez said, referring to

the category for activity or sports shoes.

To be sure, certain styles of Nike ( NKE ) basketball shoes,

including the Air Jordan 11 Retro, are currently on trend,

though not as performance shoes. "The reason we're seeing all

these promotions in Nike's ( NKE ) non-retro basketball styles is

because they're not a fashion uniform the way wearing a pair of

11s is," said Williams Trading analyst Sam Poser.

The Air Jordan 1 Mid SE, usually priced at $135, was

discounted $87.97 on Nike's ( NKE ) U.S. website as of Thursday, while

its low-top Dunks sell for $115 and high-top versions sell for

up to $165. Low-top Air Jordan 11s, a non-retro style, are

currently reduced from $130 to $97.97.

Nike ( NKE ) shares have lost 16% of their value over the last 12

months while Deckers shares have more than doubled.

Nike ( NKE ) executives have highlighted upcoming products in the

running category to compete with On and Hoka, whose sneakers

have become popular with shoppers who wear them to the office as

well as on runs.

Tierney said investors are also hopeful that upcoming

fashion shoe launches, such as the Nike Air Max DN, which will

price at $160, will counteract the slowdown in Nike's ( NKE ) retro

business.

"I think the next six months are critical," he said. "We

know that newness is coming, but if it doesn't take off now, I

think investors will ask the question, 'then when?'"