Under Armour could face ‘rocky’ year, analyst says

This could be a pivotal year for Under Armour, a sports apparel analyst said in a blog post Monday, as the brand responds to shifting fashion trends and the loss of a big retail customer while expanding into a new retail channel.

“I’m confident in the long-term trajectory for UA, but 2017 could be a rocky year,” wrote Matt Powell, an NPD Group vice president and apparel, sports and footwear analyst, in his blog.

Powell said he expects Under Armour to “hit a soft patch, particularly in footwear. … Footwear brands of UA’s size often seem to stumble on their path to growth.”

The brand’s footwear sales have soared for more than a year, with much of the growth fueled by basketball star Stephen Curry’s signature shoes.

“We believe there’s a massive opportunity with the consumer walking into those stores and looking for the Under Armour brand and haven’t been able to find it,” Plank said in July.

But making the jump from mostly sporting goods stores to the discount department store channel could be “tricky,” Powell said.

“It’s always challenging when brands move into new channels, especially new price channels,” to differentiate what likely will be lower-priced products from those found at other outlets, Powell said.

“Will the lower-priced product negatively impact the sales of the  higher-priced product?” Powell said. “Other brands have done it, but it’s tricky. You’ve got to have clear lines of distinction.”

Another challenge will continue to be fallout from last year’s collapse of Sports Authority, a key wholesale customer that filed for bankruptcy and closed its stores.

Under Armour and other sports apparel brands are all feeling the chain’s loss, Powell said. While some business that would have come through the chain has been made up online or through other retailers, “some of it has evaporated,” he said.

Brands have been forced to be more promotional to make up for lost sales, he said. But he noted that the impact on the industry is expected to be temporary and improve by the end of the second quarter.

The analyst blogged that most of his 2016 sports business predictions came to pass — but with a few surprises.

Sales of athletic footwear and activewear grew last year, he said,  but not as much as expected.

“Nike and Skechers did not have as great of a year as predicted, but things seem to be turning for both late in 2016,” he blogged. “Adidas remained on fire and earned the title ‘Brand of the Year.'”

lorraine.mirabella@baltsun.com

  • Social Slider
    Read previous post:
    Aerobics First ‘fits’ it forward with older sneakers given to those in need

    Luke MacDonald takes shoes seriously. As a co-owner of Aerobics First, a favourite Halifax shoe store among local runners, he’s...

    Close