Online, Under Armour Spreads Itself Thin
April 26 2017 - 2:54PM
Dow Jones News
By Sara Germano
Is Under Armour Inc. cannibalizing online sales of its own
products?
New research published this month shows the sportswear maker is
selling many items, particularly premium footwear like its Steph
Curry basketball shoes, at multiple retailers, a level of overlap
that could push prices lower and confuse shoppers in an already
competitive market.
Analysts from Credit Suisse tracked Under Armour men's footwear
products available on its own website, as well as those sold online
by major retailers Dick's Sporting Goods Inc., Foot Locker Inc.,
and Kohl's Corp.
In data collected during the last week of March, researchers
found more than 1,000 products available on at least two of those
sites. According to their findings, UnderArmour.com was selling 268
products also found on DicksSportingGoods.com and 165 on
FootLocker.com
Christian Buss, an analyst at Credit Suisse, said he was
surprised by the amount of premium sneaker overlap. "The more
broadly a product is available, the less likely the sale will be
captured at full price, and the more likely the brand is to
struggle with its positioning," he said.
The analysis comes as Under Armour works to revive slumping
revenue growth, particularly in its core U.S. market. The company
reports its latest quarterly results on Thursday.
Nike Inc. and other sportswear rivals also sell some premium
products across multiple sites -- for example, Nike's popular Air
Force 1 shoe is available on Nike.com as well as
FootLocker.com.
But it and Adidas AG, both of which have bigger products lines
than Under Armour, can be more selective in how they parcel out
goods to specific retailers, Mr. Buss said. Nike often offers
limited releases of its premium Jordans to basketball shoe stores,
which adds to their exclusivity and makes discounting less
likely.
Under Armour didn't respond to requests for comment. On a call
with analysts in January, Chief Executive Kevin Plank said "we
learned our segmentation strategy could be sharper" and pledged to
improve the company's results.
Under Armour began offering signature basketball shoes in 2015,
with its first edition of sneakers for Mr. Curry. Those shoes tend
to be less expensive than signature shoes for rival stars such as
LeBron James and Kevin Durant, both of whom have lines with
Nike.
Nike recently cut prices for some of its signature sneakers, and
Foot Locker last week warned of weak quarterly profits, though it
blamed delayed tax refunds for sapping demand for NBA All-Star
sneakers.
Sneakers are still a small business for Under Armour, which was
punished last quarter after its revenue growth came in below 20%
for the first time in nearly seven years. North American sales
accounted for 83% of Under Armour's 2016 revenue, in contrast with
Nike and Adidas, each of whom conduct more of their business
outside the region.
Under Armour is expected this week to report a quarterly loss of
$17 million, or $0.04 per share, on sales of $1.1 billion,
according to analysts polled by FactSet.
Write to Sara Germano at sara.germano@wsj.com
(END) Dow Jones Newswires
April 26, 2017 14:39 ET (18:39 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
Foot Locker (NYSE:FL)
Historical Stock Chart
From Mar 2024 to Apr 2024
Foot Locker (NYSE:FL)
Historical Stock Chart
From Apr 2023 to Apr 2024