Under Armour steps it up

Company launches football cleats with fanfare


Dulles, VA. -- Teenagers don't get out of bed early on a Saturday morning for much. But yesterday all it took for the Heritage High School football team in Leesburg, Va., was the 9 a.m. launch of the Under Armour football cleat.

The players hovered over each other trying on the different styles. They had to be the first to get a pair before summer football camp starts.

"Now that the cleats are out, I have to get a pair to match everything else," said Reid Hoff, who plays tackle for Heritage and said he owns Under Armour T-shirts, socks, shorts and hats.

It's exactly the kind of gotta-have factor the Baltimore sportswear company wants in launching the cleat, a product introduction small in dollars but so important to the company that founder Kevin Plank made rare public appearances at two stores, including Dick's Sporting Goods in Dulles Town Center, where the team shopped.

At Dick's, a deejay played hip-hop music and ESPN Radio personalities Tom Davis and Damon Yaffe broadcast live from the store. Dallas Cowboys defensive end Eric "Big E" Ogbogu, the chiseled man seen shouting the now-ubiquitous slogan "Protect this house" in Under Armour commercials, autographed posters. A huge blow-up football cleat stood guard at the entrance of the store.

Under Armour has made a name for itself by tapping into a market that had gone largely untouched. It owns about 70 percent of the compression performance apparel market.

But with the football cleat, Under Armour is going head-to-head with the far larger Nike, which for years has a held a clear grip on the cleat market.

Plank concedes that the market is tough because it produces low margins. Football cleats are worn only in play or practice; there's no use for them off the field.

But he also said there's room for innovation because cleat styles haven't changed in two decades. In 2004, Plank introduced football receivers' gloves and won about 18 percent of the market in the first year. Today Under Armour owns about 30 percent of the market.

Plank also said Under Armour has a distribution advantage because most cleats are sold in stores like Dick's and Sports Authority, big sellers of his brand. He also plans to tap into his following of football players, which includes the NFL and pee wee players. The cleats were tested by players from the University of Maryland, where Plank was once the special teams captain, and other schools.

"We went into the football cleat business because we knew we could win," Plank said.

Under Armour began to subtly build a buzz around the cleat last year, featuring a click-clack sound in its commercials. It then released commercials featuring the cleat during the NFL draft and around the same time displayed the shoes on museum pedestals in sporting goods stores. They also began taking pre-orders for the shoe.

Yesterday, Under Armour passed out little black devices that made the click-clack sound. Sales associates wore T-shirts with "Click-Clack. You hear us coming" written on the back.

Under Armour hopes to sell $8 million to $10 million of the shoes, or 5 percent to 10 percent of the market, in the first year. In a recent report, Brendan Mathews, a contributor to The Motley Fool financial Web site, predicted the company could sell as much as $15 million and said the cleat could be a beachhead into the rest of the $15 billion athletic footwear market.

"Based on the strength of the brand in football, I'm optimistic about what they're going to sell," Mathews said in a phone interview yesterday.

Under Armour is no stranger to taking risks or being the underdog. Plank started the company from his grandmother's basement in Georgetown. He passed out shirts to former teammates who had become NFL players. Most of his initial business was directly with college teams before Plank persuaded Dick's to sell the shirts in 2001.

"I was like, `Man what is he doing?'" said Ogbogu, one of the teammates who became an Under Armour fan.

During yesterday's launch, Plank took time to reflect on how the company has changed, particularly since its public stock offering late last year. He called operating as a public company "an eye-opener."

"There are high expectations for Wall Street," Plank said. "You have to deliver the numbers. You have to do what you say you're going to do."

He dismissed critics who have said the stock - which had the biggest first day run-up of any company in five years - is overvalued. He said that it's too early to judge Under Armour's success as a public company and that a better benchmark will be at the two-year or three-year mark.

But yesterday, the kids buying Under Armour cleats weren't thinking about Wall Street.

Several Heritage High players were still at Dick's three hours after it opened, playing a video game featuring Under Armour gear and stopping to listen to the ESPN Radio interview with Plank. They carried bags with posters, cleats and Under Armour shirts. They also wore Under Armour dog tags around their necks.

Alex Bailey, a defensive end, said he likes the way Under Armour shirts keep him cool in the summer and warm in the winter.

"Nike tried to copy off Under Armour, but Under Armour is the original," Bailey said. "I'm going to stick to the original for my apparel.

Sean Friedman, a 10-year-old whose favorite player is quarterback Tom Brady of the New England Patriots, had a simpler reason for wanting the shoe.

"Because it's cool."


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