Under Armour Moves Out Of Comfort Zone With Cross-Trainer Shoe

Plank Says Under Armour's Foray Into Footwear Market Feels Right

Under Armour (UA) Chair & CEO Kevin Plank, whose company on May 3 launched its New Prototype cross-trainer shoe, is "exposing [UA's] house to a tornado" as he "prepares to move the [UA] brand out of its comfort zone into the cutthroat, $18.3[B] athletic-footwear market," according to Sean Gregory of TIME. UA's apparel business is "solid -- up 37% in 2007 -- so [UA] certainly doesn't need to jump into a new category to grow." Plank: "Maybe I'm a little naive as we approach the footwear market. Maybe we don't recognize the fact that we're walking on a tightrope on the 55th floor. But the fact of the matter is, it feels right. And that's what brands are." But Nike, which in March released its SPARQ cross-trainer line, is trying to "relaunch cross-training and deny the space" to UA. Susquehanna Financial Group analyst John Shanley: "Nike is going after them with a vengeance. They want to make sure the introduction of the cross-trainer is as painful as possible for [UA]."

BUILDING A BRAND: Gregory notes many analysts "admire [Plank's] approach to expanding his brand." UA could have "jumped right into one of the two biggest sports-footwear categories -- running and basketball -- to try to steal share" from bigger companies. But UA instead chose a "more disciplined approach," testing the "footwear landscape about two years ago, when it started making American-football cleats." SportsOneSource indicated that UA now has a 20% share of the football cleat market. UA then "tried on baseball and softball cleats and grabbed an 11% share in that $200[M] market." Shanley: "If [UA] is going to become a full-service athletic brand, it has to go after footwear. And by taking these small steps, they're being smart. They're doing the right thing." Gregory writes UA is "picking an ideal entry point" as it attempts to move beyond cleats, as the training-shoe market is "ripe for a revival" (TIME, 5/26 issue).