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Press Release: Under Armour Calls For Athletes to Stop Training in Running Shoes Originator of Performance Apparel Launches Its First Performance Trainers;
Launch Aims to Reinvent Cross Training Category and Change the Athletic
Shoe Landscape
Quote:
BALTIMORE, April 28 /PRNewswire-FirstCall/ -- Under Armour, Inc. (NYSE:
UA) On 5.3.08, thirteen years after getting athletes out of sweat- soaked
cotton and into moisture-wicking performance apparel, Under Armour will
reinvent the cross-training footwear category and complete its performance
training package when it releases the first pure performance training
footwear line engineered to make all athletes better.
Under Armour Performance Trainers -- the brand's first non-cleated
footwear offering - are built with the advanced stability and support
technology that will help athletes training to be better than their best,
and improve the physical skills that matter most -- Power, Speed and
Evasiveness.
"Today's athletes, who train 95 percent of the time to be at their best
the five percent of the time they are competing on the field, court or ice,
need better footwear," said Kevin Plank, Chairman and CEO, Under Armour.
"Too many young athletes are training in the wrong footwear, and we're
offering the equipment that's going to maximize their focused regimen and
help make them better."
With the launch on May 3, Under Armour will further grow its footwear
offering, which began on-field in 2006 with football cleats, by moving off
the field and into the gym with performance trainers in 2008 and paving the
way for the potential entry into new categories in the future.
Under Armour Performance Trainers
The Under Armour Performance Trainers line includes the UA Proto
Power(TM) Trainer, UA Proto Speed(TM) Trainer and UA Proto Evade(TM)
Trainer. Each trainer features Directional Cushioning Engineering (DCE(TM))
- an integrated cushioning, stabilization and propulsion system that
strengthens the directional movements and physical skills that matter most
to athletes.
The UA Proto Power Trainer enhances vertical stability and propulsion
for explosive upward motion and controlled downward impact. The UA Proto
Speed Trainer propels athletes along a linear path with total control and
comfort to improve straight-away speed. The UA Proto Evade Trainer allows
for maximum lateral agility to strengthen quick side-to-side cuts and
evasion.
Technology
DCE Midsole Components
-- ArmourGuide(TM) -- Directional cradle that guides the foot through
athletic movements, providing stability, efficiency, and total
propulsion
-- ArmourBound(TM) -- Innovative and proprietary UA material that reduces
the foot-strike compression found in typical materials and provides
superior rebound
-- ArmourLastic(TM) -- Strategically placed shock absorption zones
decrease the effects of impact
UA Engineering
-- Performance Outsole -- Performance engineered blend of multiple rubber
composites for superior grip, flexibility and durability.
-- UA HeatGear(R) -- Keeps athletes cool, dry and light when it's hot. The
original second skin layer, HeatGear(R) sparked the revolution of
performance apparel and rendered cotton T-shirts obsolete.
-- UA-Engineered Synthetics -- Provides stretch and recovery, with less
weight and bulk.
-- UA Performance Mesh -- Supplies maximum ventilation and minimum weight.
Performance meshes and strategically placed ventilation zones deliver
better air-flow and breathability.
Under Armour worked closely with athletes of all levels including
Vernon Davis (San Francisco 49ers) and Alfonso Soriano (Chicago Cubs) to
field test the performance trainers and ensure they deliver an undeniable
performance training advantage.
"Our keen insights from high school, college and professional athletes
revealed the lack of proper footwear to fit their unique training methods,"
said Steve Battista, Senior Vice President, Brand, Under Armour. "As the
originators of performance apparel it was our responsibility to make sure
young athletes have the footwear that will take their game to the next
level."
The Proto Speed Trainer and Proto Evade Trainer are available for men,
women and youth. The Proto Power Trainer is available in men's and boys'.
Press Release: Under Armour racing toward running-shoe market in ’09
Quote:
Less than a month after the debut of its first line of non-cleated footwear, Baltimore-based Under Armour is gearing up for its next athletic shoe launch.
“The next category Under Armour will attack is running,” Kevin Plank, Under Armour’s president and chief executive officer, said during the company’s first Investor Day last week.
Under Armour expects to begin selling running shoes in the first quarter of 2009, further challenging athletic shoe giants like Nike, Adidas and New Balance.
“We have demonstrated our ability to compete with the market leader [Nike],” Plank said.
The U.S. athletic footwear market generates about $9.5 billion in annual sales, according to NPD Group, Plank said.
Under Armour has designed six models of running shoes that would sell for $90 to $100.
“We believe this signifies a tremendous opportunity for growth in the footwear category,” said Raphael Peck, Under Armour’s senior vice president of footwear and licensing. “Footwear will be our growth driver — a major growth driver for Under Armour.”
Plank has also said Under Armour will consider launching a basketball shoe.
The company, which initially made its name in footwear by selling football and baseball cleats, on May 3 began selling three lines of Performance Training footwear.
According to SportsOneSource, the company sold about 40 percent of its initial stock of Performance Training footwear. Under Armour expects to sell 1 million pairs of cross trainers in 2008.
Despite a challenging retail environment, Under Armour’s net revenues increased 27 percent in the first quarter to $157.3 million, up from $124.3 million in the same period last year. The company expects 2008 sales of between $765 million and $775 million.
To kick off its Performance Trainer campaign, Under Armour spent an estimated $5 million for a 60-second commercial during the Super Bowl. The extra marketing expenses cut into the company’s first-quarter profit — down from $9.9 million to $2.9 million — and drew criticism from analysts, sending Under Armour’s stock price down.
“We don’t intend to run a Super Bowl ad for [the running shoe],” Plank said. “I promise.”
Under Armour Inc. announced Tuesday founder Kevin Plank will be handing over his duties as company president to former Lands’ End President David McCreight, a move that some say could be a response to the company’s struggles this year in the stock market.
McCreight, 45, will join the Baltimore-based sports apparel company in September and will be charged with managing the company’s core businesses — apparel, footwear and accessories — and overseeing the company’s planned expansion in the United States and abroad.
Plank will remain as chief executive officer and chairman of the board, and will keep an active, daily role with the company, a publicist said. McCreight, who helped transition Lands’ End from a domestic catalog business to an international brand, will work alongside Chief Operating Officer Wayne Marino and report directly to Plank.
“David’s experience and insight will create an immediate impact on our business,” Plank said in a news release. “The addition of David allows me to focus on driving growth and steering the UA brand, both in the United States and around the globe.”
Plank declined to comment further on the leadership change, according to publicist Brian Williams. Messages with Lands’ End media relations regarding McCreight were not returned.
Those who follow Under Armour suggested the move isn’t necessarily indicative of the company’s desire for a management change but is more likely a response to struggles this year in the stock market.
“I think they are more a victim of the economy than management,” said Andrew Bekoff, chief investment strategist at New York-based brokerage Meyers Associates LP. “In the United States when you’re a publicly traded stock and a high-profile company, when people see you underperform they don’t care what the answers are — they just want to see change.”
Under Armour has seen its stock price drop by as much as 46 percent this year. Its first quarter profit was 71 percent lower than the corresponding quarter of 2007, and the company has lowered its annual operating income projections by 5 percent to between $103.5 million and $104.5 million. Bekoff predicted the apparel company’s stock could fall as low as $15 per share this year.
Here are some abstracts from the Under Armour Inc Q3 2008 Earnings Call Transcript
Quote:
And now, we're poised to take that next logical step with our move into the running footwear category, and we're communicating the Under Armour point of view to our core consumer, that team sport athlete, with a very simple message, "Athletes Run".
When you look at the development of our footwear business, it has been measured and purposeful with each step making sense of the one behind it and the one in front of it. We have proven both to ourselves and more importantly to our core consumer that we are authentic players in footwear. So we look at our acceptance of the running brand in early '09 as very achievable, a belief shared among our recent retail partners and ultimately our core consumers.
....
We're confident in our ability to grow because we've been making the investments in our growth drivers and we're starting to see the payoffs from these investments, with running footwear being the most obvious example.
...
Footwear revenues increased from $2.2 million in the third quarter over prior year to $13.1 million and was mainly fueled by the performance trainers which were launched in the second quarter of 2008. Third quarter gross margins were 51%, an increase of 40 basis points compared to the third quarter of 2007 which was impacted by reserves and allowances related to discontinued footwear.
Question-and-Answer Session:
Omar Saad – Credit Suisse
We know you talked a lot about the cross training, the performance trainer launch with a million units, how can we start thinking about the size of running launch? I know it's a much bigger category, potentially a broader set of distribution partners, and is that going to start shipping in the fourth quarter? Is that one of the drivers of the fourth quarter growth or is that really '09 driver.
Brad Dickerson
When we put together our fourth quarter, we did not make any assumptions about shipping running footwear in that fourth quarter. What will dictate for us whether running footwear does get shipped is whether our retail partners and our stores really want to set their floors. So that will be the driving factor. But when Brad put together the outlook for Q4, it did not include our running footwear in it.
Kevin Plank
Let me lean on the running message we'd like to get out there. We've established a pretty solid record in footwear to date that began back in 2006 with football cleats, came back with baseball cleats in '07, and then training of course this year. In every instance I think we sold it and sold through the amount of product that we planned to do.
What's happened there is really the support of some great partners that have helped us, but also some really good product and some really great stories that we're communicating to that consumer. With that, when we started, I used to use the statement that we didn't get into the footwear business to build football cleats. As much as we've built football cleats that put us in the position to sell additional categories of footwear.
We also said that training would decide our success or not by our ability to enter additional categories. So with the announcement that in the first quarter of 2009, we're going to selling running shoes is a big statement for our brand. The message there is that as you look at the market sizes of categories, and we took a lot of gaff when we first said we were going to make football cleats, and people said, "The market is so small." Football from a retail dollar standpoint is $110 million market and we took a 20% plus market share there.
....
It's nearly four or five times the size of the largest category to date which is training, with running shoes being $4.7 billion. We believe there's a lot of established brands there, because in these other categories we entered them. We said we're going to reinvigorate, we're going to raise ASP, and bring attention to markets that had been previously forgotten about.
People know about the running shoe market, but we believe that, and I think we're pretty confident that our consumer runs. And our consumers are going to give us the opportunity to show them our product. What I can tell you is that our product has been tested. Our product has been received tremendously by the retailers who've seen it.
We've actually had some on-site fittings and try outs at some recent marathons including our own ballroom marathon that we have here with more than 18,000 runners going through our booth and looking at some of the footwear and participating in the marathon, and the feedback so far has been great.
And most importantly, our job as a brand is to create innovation and create new stories out there. The ability to bolster our Big Box sporting goods guide and hopefully give a shot in the arm there, as well as the expansion we have with footwear for the first time about to be sold, with some of our new mall partners as well including [Flick] as well as Finish Line, and then of course run specialty.
This isn't something which is just a Big Box story. This is something that the best specialty players out there, the mom and pops are giving our brand a shot. I think from a comprehensive standpoint, we feel good.
Wayne Marino
One-third of our year over year dollar growth came from footwear. I think what I can tell you which we feel good about is 2009 that year over year dollar growth will be even greater for footwear.
Omar Saad – Credit Suisse
How many new doors is this footwear opening up for you with new channels coming?
Kevin Plank
For the most part it's where we've done business to date, but also the halo effect that's taken place. Florida is going to be big and we're basically going to be selling the product in 700 or so doors that we have apparel in today. So not big expansion. With 4,000 doors behind that partner, there's plenty of room to grow there as we look to expand.
And then of course, specialty. The addition of having running footwear has made us relevant again. Where we had difficulty getting in as an apparel only brand in some of the Luke's locker rooms in Dallas, Texas and some of the more marquis specialty retailers, it's really given us a platform to enter the brand to give people the opportunity to experience Under Armour.
We really see it as a plus. You've got to understand that from the highest end, the road runners of the world, there's a lot of people that are giving us a shot with this, so we're going to learn a lot in the first few months. But we don't believe this is a one hit. We think that we've got some wags and I think the product speaks for itself.
John Shanley – Susquehanna
Can you give us an indication of the marketing spend for the running shoe launch? Will it be comparable to what you did when you launched the cross trainer and can you give us an idea of the size of the product offering that you're going to bringing in for running?
Brad Dickerson
As far as the marketing spend goes, I think what you can anticipate is the fact that our running launch is in the first half of 2009, similar to our performance training launch in the first half of 2008. I think you'll see the same kind of seasonality in our marketing spend year over year as far as first half versus back half.
Wayne Marino
I think what I said was that we had a very successful training launch and this year footwear in total was one-third of our year over year growth in footwear. With running in 2009 I would expect that year over year growth would be even greater as in footwear. So running is obviously a larger category. It will have a bigger impact on our year over year growth, but in terms of specific details, we're not going to get into that right now.
Brad Dickerson
It will be larger than training but also 100% allocated just like training was. I think the consumer and the market we can tell you there is more demand out there than we're putting in the market as well.
.......
Thomas Shaw – Stifel Nicolaus
Any color around the response to the new generation two trainers and secondarily how you would expect that product to be positioned in year two given the running launch?
Kevin Plank
The product hit the floor in the last couple weeks and the early rates that we have are great tops. One of the things that you learn in the footwear business is that if it's much more seasonal, or the product needs to turn much faster. You don't get six months on the floor when the consumer is looking for something on a weekly, at the very worst a monthly basis.
The ability for us to freshen that up in our sold through; I think we're very pleased with the shelf life we have with the Gen One training but the ability to come back and now clean out. We sold through virtually what we wanted to with the Gen One training and then come back with a new color in the holiday is important.
But for us, it's a lot of learning that's happening right now. We're going through this process of, instead of how two offers a year over a seven month time frame, begin to look and say, how are we going to compete, and more importantly begin to differentiate our important Big Box Sporting Goods partners, and the new players and existing players that we have in the mall, and then of course other categories.
What you can count on from us though, is we're not going to forget about training. We're not looking to cannibalize our training business with running. We are very aware that that's possible and we're looking for a great big pop in the first part of 2009 with the launch of running, but you'll see us come back and see us continue to tell the training story because training for us as a business is a much bigger platform at the same time too, is that training has that halo effect beyond just the footwear but really leads back to our apparel as well.
You'll see us stay consistent and make sure that we build that platform that when someone should not train in running shoes.
Wayne Marino
We expect certainly a full year of performance for trainers this year. We launched part year, so we'll get a full year in 2009. I think the other point that Kevin and Brad made consistently is there could be some cannibalization. People could actually choose the best shoe on the wall. But we've been very confident but yet not overly aggressive.
So our program for running is an allocated program and the benefit of that is to continue to keep that demand up pretty high. It's a smart way to launch a program.
Jeff Mintz – Wedbush Morgan
On the trainers, the launch of version two, did you change the volume that you did this year or did the volume end up being about where you expected?
Wayne Marino
The volume really didn't change this year. For us, when we launched it was an allocated program and we stayed with it. The one thing, if anything was the timing really of how we shipped. I think the way we shipped was 70% first half, 30% in the back half and we were anticipating to ship a little bit more in Q4 versus Q3 but we ended up shipping a greater amount in Q3.
If you've seen any shift, it really was the timing of when we shipped in Q3. But overall, the number itself was an allocated program and stayed that way.
Kevin Plank
Just to reiterate some of the assets that we've built around training, we really utilize, I think the sport of football is where we get the big bang from training. So we talked about our high school All American game, the Senior Bowl All American game at the collegiate level, and then we had from a marketing standpoint, we've owned the NFL Draft for years.
The thing I would mention from that is the NFL Combine, and we're happy to announce this year that we actually signed a relationship agreement with the National Football League to take over the outfitting of more than 300 plus athletes that will be invited to the NFL Combine this upcoming March.
That's something that's just a major platform for us to build the authenticity from our apparel standpoint, but again reaching back to the concept of combine, the concept of that when athletes are training and not just doing their movement. It's also about lateral flexibility and I think you'll see that authenticity bleed through the product that's on the field and also what you'll see great athletes wearing on the field when they are in training.
USA Today are reporting: Under Armour makes a run at Nike with new footwear line
Quote:
The sneaker wars will heat up on Super Bowl weekend, when Under Armour begins challenging Nike with its first line of running shoes.
The footwear goes on sale Saturday, Jan. 31, amid a focus on sports that peaks with the game Sunday.
Best known for tight-fitting performance wear, Under Armour will take on Nike and Michael Jordan in basketball shoes, CEO Kevin Plank says. Eventually, it also will offer soccer boots and tennis sneakers and become, Plank predicts, the world's "next great athletic brand."
Plank, 36, says Under Armour, not Nike, is the hot brand among high school, college and pro athletes. The 13-year-old company defied Wall Street predictions by revitalizing cross-training shoes and rolling out football and baseball cleats.
"We're the athletic brand of this generation," Plank says. "The 15-year-old kid of today is not growing up and saying, 'Golly Jeez, I really want a pair of that brand with the orange box.' They're growing up and saying, 'I want a pair of Under Armours.' "
Bring it on, Nike spokesman Derek Kent replies. The Swoosh "connects deeply with today's youth," he says. As for Under Armour, he says, "We thrive on competition."
Plank could back up his "fighting words" in the USA but will be hard-pressed overseas, says Bob McGee of Sporting Goods Intelligence. Nike has $18 billion in annual revenue, Under Armour a projected $765 million.
Under Armour will offer a total of six running shoe models at suggested retail prices of $85-$120. There will be four road shoes: the Revenant ($119.99); Apparition ($109.99); Illusion ($94.99); and Spectre ($89.99). There will be two trail shoes: the Mirage ($94.99); and Chimera ($84.99).
Starting Jan. 1, New York Giants star running back Brandon Jacobs and U.S. women's national soccer team defender Heather Mitts will headline what Under Armour vice president Steve Battista says is the company's biggest marketing campaign.
While under armour is a big brand in the US I am not sure if it has much marketshare anywhere else. Certainly not a known brand in Australia. Wonder if they will begin selling them anywhere else now that they also are making running shoes.
New player in running shoe market
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