SBD/February 15, 2013/Marketing and Sponsorship

Under Armour Hopes New Retail Store In Baltimore Can Increase Struggling Shoe Sales

Seventy-five percent of Under Armour's revenues come from the apparel category
Under Armour on Saturday is opening a new 8,000-square-foot retail store in Baltimore, and it is part of the brand's "effort to get past adolescence,” according to CNBC's Brian Shactman, who reported live from the store. There are "two issues to deal with when you talk about UA, which is an incredibly successful company, but it's still very much an apparel company.” Seventy-five percent of revenues come from apparel, while the shoe business generates less than 15%. Shactman noted, “That's growing pain No. 1. They need to get more traction with shoes." To help with that, shoes are "pretty prominently displayed" at the Baltimore store. The second issue is that UA is "American centric." Shactman: "Less than 10% of revenue comes from outside North America, and that could be the subtle test of this Baltimore store. ... If this store does well, perhaps it's a template for stores beyond our borders." Despite those shortcomings and a "stock that frankly has underperformed the broader market in this recent rally, this company is still growing revenue about 20%-plus every quarter, and it's also getting the youth of America totally hooked." Shactman: "This is the key: the shoes. You see a collection here you won't see in any other store that they have in North America. They want people to see from head-to-toe how you can wear Under Armour” (“Squawk Box,” CNBC, 2/15). UA President, Chair & CEO Kevin Plank said, “This is the type of store we you’d typically put in warehouse somewhere. But here in our town, we need the retail presentation, so we wanted to see how consumers would react to it and get real-time feedback." He added it will give the company a "chance to really accentuate products that we want.” Plank: “Footwear anchors this store. Footwear is going to anchor our company as well. Our long-term vision is someday that our women’s apparel business will be larger than our men’s apparel business and that footwear someday too will be larger than our apparel business” ("Squawk On The Street," CNBC, 2/15). 
 
ETCH-A-SKECHERS: Fox Business’ Liz Claman reported Skechers' stock “is skyrocketing … after the company absolutely crushed expectations for its fourth quarter, blowing away sales and earnings estimates.” Skechers CEO Robert Greenberg said the company has a “very talented staff of 40 designers and great factories around the world that make the product." Greenberg: "A lot of shopping, a lot of trending and seeing what people are wearing, and we interpret everything and give it our little touches and that makes our product unique.” Silver medal-winning U.S. marathoner Meb Keflezighi is a Skechers endorser, and Greenberg said, “We’ve learned how to make all sorts of great products and different technologies, and running is the last frontier. It's the biggest piece of the entire footwear industry." He added of Skechers going into the apparel business, “We’re not doing that directly. We have licensees for that that are in the apparel industry” (“Countdown to the Closing Bell,” Fox Business, 2/14).
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