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Why “Under Armour Sprinting Past Its Footwear Sales Goals” Is Dead Wrong

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The maker of sports apparel continues to put out new styles in new categories, helping to drive the brand’s market share opportunity forward. Here’s how UA could blow right past previous sales goals.

Source: How Under Armour Could Sprint Past Its Footwear Sales Goals — The Motley Fool

Under Armour isn’t sprinting past anything anymore. That year over year growth of 20% has hit a wall and it seems that Under Armour’s expansion abroad (China) I feel is coming at the wrong time. The amount of money it takes to grow into the international market is huge to say the least. It will require investment and at the moment the split of stock and renaming Under Armour Class C has done little to inspire a BUY position in either Class C $UA or Class A $UAA. So where will the money be generated to make a growth move like expanding internationally? This is a serious question. I want to understand just how they will allot money to this decision.

Under Armour’s goal is to hit 7 Billion a year from their current 5 billion. Footwear tends to be an important aspect of this growth. The problem is Under Armour isn’t exactly nailing this section of the business. The lingering effects of The Sports Authority’s bankruptcy and Under Armour’s poor marketing and products haven’t been fixed.

In the source article the writer is stating a few things and they are all wrong: Story’s claims in bold print

Connected Footwear is an area for growth. 

No it isn’t. I get that the amount of tech UA has at it’s disposal is a gateway for attempting to get users to convert, but that type of digital isn’t  converting anyone into a buyer of the brand. They may get marketing, but consider that Nike and Adidas both have connected footwear with Nike+ and Adidas miCoach, and neither of those programs are the reason why people are buying Nike products. As a matter of fact, Nike stopped making the watch associated with Nike+ and partnered with Apple because they realized that the tech could be a drain if they continued to spend on a segment that is clearly in the digital world. If Nike stopped “pushing” Nike+ why would UA begin to double down on Connected Footwear?

More important Nike stopped very quickly in developing the Nike Watch and partnered with Apple last year for a Nike+Apple Watch. Nike stopped making wearable tech because Nike was paying attention to what has happened with FitBit. FitBit($FIT) started strong in 2015 at 47/share. Today $FIT is at 8/share. All of this happened because of Apple. What does Under Armour do? They create wearable tech… You don’t go into a war against Apple. I know you have all of this data from your tech acquisitions UA, but Apple has all of the credit cards on file and the ability to prevent your app from reaching its market.

Basketball and running seem to have been leading footwear sales in 2016. Demand for the whole line throughout the year has been high.

Basketball hasn’t been leading jack in 2016. Utilizing NPD’s reports Basketball has been the reason companies haven’t been attaining the margins they could have. According to the NPD report, “Sales of men’s athletic footwear were essentially flat for the quarter, as the struggling basketball category offset big gains in classics.” 

This was in the 3rd Q 2016 report. If this is based on POS data, then how in the hell has basketball been doing anything? Running has also been slow. Retro and athleisure has been the driver of sales this year. In both markets Under Armour isn’t making a dent. They are in preparation with UAS and with a Kohl’s deal, but Under Armour’s biggest footwear position is with Curry and they haven’t expanded to anything else.

I have said over and over I’m a huge Under Armour fan, but the source article is the narrative being created and I think it does huge disservice to shareholders and potential buyers. Under Armour needs a product and marketing shake up. I’m talking a serious shake up because at the most important place of growth for the brand they are missing the target in a major way. Until UA begins to build the narrative with the retail places carrying their brand, they are not going to see any growth in the footwear department. Their focus shouldn’t be on the international market until they have nailed the domestic market.