Under Armour holds breath

Shoe's sales tally may be weeks off

May 06, 2008|By Andrea K. Walker | Andrea K. Walker,SUN REPORTER

Under Armour's multimillion-dollar bid to gain a toehold in the broader athletic shoe market began over the weekend with the launch of its new cross trainer, but it could take weeks until the Baltimore company knows whether it has a winner.

Preliminary reports indicate that the new shoe didn't break any sales records, but some say it didn't do badly either.

One analyst said sales exceeded generally low expectations, while another said the new shoe landed in stores with subdued fanfare.

Steve Battista, Under Armour Inc.'s senior vice president of branding, said the company was "very pleased with the first weekend of sales," although it won't get numbers from its retail partners until later in the week.

"As great as this past weekend was, it was really only just 48 hours of an entire new business for Under Armour," Battista said.

Wall Street is closely watching sales of the cross trainer - Under Armour's first foray into shoes worn off the field - to gauge whether the Baltimore company can broaden its appeal in its bid to become a sports apparel powerhouse. Under Armour is banking a great deal on the shoe's success, spending heavily on marketing, including millions on its first-ever Super Bowl commercial, at the expense of earnings in the first half of the year.

"Success or failure is not going to be determined by a day or a weekend," Kevin A. Plank, Under Armour chairman and chief executive officer, said in an interview early Saturday minutes before the launch.

"Today is just the beginning," Plank later told employees at the company's flagship store at Westfield Annapolis Mall. "It's just the starting line."

SportsOneSource, a company that tracks shoe sales, said it would have a better indication about the launch results in two weeks.

When Under Armour launched its football cleats two years ago, it didn't see results until six weeks later. It now holds 22 percent of that market.

"It really is difficult to judge the first weekend," said Matt Powell, an analyst with SportsOneSource. "Sometimes the numbers look big and don't materialize or stay that way. Sometimes it's vice versa. I think we're better off to wait a couple of weeks to get a good read."

Omar Saad, an analyst with Credit Suisse, said in a report that his team of analysts, which visited several stores over the weekend, estimates Under Armour sold 15 percent of the 1 million pairs of the shoe it plans to put on the market. He said the launch exceeded generally low expectations.

"We continue to believe that the company can successfully extend into footwear and other categories," he said.

Kate McShane, analyst with Citibank Inc., said customer traffic was low at a Dick's Sporting Goods and Finish Line that the financial firm visited. Dick's had canceled previous plans to open one hour earlier at 8 a.m.

"By noon, traffic remained somewhat stagnant, particularly for a weekend afternoon," McShane wrote.

Under Armour planned the launch with much fanfare. There were celebrity appearances, including Ravens player Ray Lewis at Dick's in Columbia. At the Annapolis store, professional sports trainers led consumers in training sessions that included squats, running drills and abdominal exercises.

Athletes of all ages arrived early at the Annapolis store to be the first to get the shoe, although there were no long lines waiting to get inside.

Andrew Melech, a 35-year-old X-ray technician from Hyattsville, said he had been waiting for the shoe to go on sale ever since he saw pictures of it in magazines and commercials on television.

"It looks like a high-quality, high-tech shoe," said Melech, who plays football and tennis and works out on the elliptical at the gym. "This is the first time I've been excited about a shoe."

Kirk McNeeley was another early arrival. The 37-year-old Bowie resident and electrician described himself as a gym rat and said he was eager for the release of the cross trainer.

"I'm just addicted to it," McNeeley, wearing an Under Armour sleeveless compression shirt, said of the company's gear. He bought two pairs of the cross trainers.

Aristides I. Habjipanteli, 13, dragged his mother to the Under Armour store the week before the launch to look at the cross trainer. He said Under Armour wear is for true athletes. He is a runner and takes karate training. He wanted to make sure he got a pair of the shoes on the first day.

"I was waiting for weeks," he said.


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