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Business Talk: Adidas Retakes No. 2 Sports Brand Position From Under Armour

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Source: Adidas Retakes No. 2 Sports Brand Position From Under Armour

Under Armour isn’t even in the top 5 anymore! From the sneakerhead perspective, Under Armour’s drop was something they saw coming… at least that’s what your sneakerhead friends will tell you. However, it takes a bit more of an understanding of the business to make this statement. Under Armour was not relying on sneakerhead hype. Sneakerheads actually make up a very small portion of the sales in footwear and apparel. Is the sneakerhead influence important, yes and no, but that’s another post.

Under Armour is a victim of its own growth. After growing so rapidly, they haven’t stopped growing. In the 3rd Quarter report they actually met their goals, but it is Plank’s disclosure that they won’t be able to hit that same amount of growth in the next few years. What a lot of people heard is, “We aren’t going to grow anymore.” That is not the case. UA is saying that they are going to do what Amazon does. Amazon grows, but it doesn’t provide revenue for its shareholders. The shareholders continue to buy stock providing Amazon with capital to attempt ventures.

Under Armour was actually sharing its growth with its shareholders which is a good thing. Plank decided yesterday, for lack of a more developed explanation, to not share dividends, but to reinvest the capital into marketing in order to recapture the shares and growth they they have experienced over 20 years.

It’s a smart play, but what has to happen now is those who buy stock have to be willing to hold onto that stock for a longer time.

Adidas has the re-surging retro trend and Kanye to thank for its move back into the number 2 spot, but in all honesty Adidas is playing a tough game. The NMD, one of their best sellers (sneakerhead talk coming) is also one of the best shoes on the grey market. It resales for solid numbers. In the last month that resale has slowed and is now leveling out at around 179.99 for resale. It was at 209.99 for the past year. They are pushing a lot of product out and doing so could hurt their market share as people inevitably return to Nike. It will be something to watch.