Why Under Armour’s Footwear Sales Growth Is Accelerating

Did Under Armour Beat 1Q16 Earnings Expectations?

(Continued from Prior Part)

Under Armour’s footwear business

Under Armour’s (UA) footwear business registered an impressive 64.2% growth (VUG) rate in 1Q16 versus 1Q15. Footwear sales came in at $264 million in the quarter, representing 25.2% of the company’s total revenue. In comparison, footwear rival Skechers (SKX), which also released first quarter results on April 21, posted record quarterly sales of almost $979 million, up 27.4% year-over-year.

Under Armour’s signature footwear line, the Curry Two, named after last season’s NBA MVP, Stephen Curry, had a lot to do with the growth acceleration in the quarter. Kevin Plank, CEO of Under Armour, stated, “Our strong momentum in the fourth quarter of 2015 carried through into the new year with the Curry Two topping the signature shoe charts consistently week after week. Stephen’s phenomenal season has brought unprecedented attention to our overall Footwear business, and especially basketball Footwear, and is driving both door expansion with our key mall partners and credibility with the hard-core basketball kid.”

New product launches

Under Armour recently launched new iterations of its popular SpeedForm Gemini running shoe, including the record-equipped smart shoe made available for sale in late February. The company also launched the UA Architect, the company’s first shoe manufactured using 3D printing technology. According to Plank, “The shoe sold out in 19 minutes on our e-commerce site at a suggested retail of $300.” UA plans more launches in the future using variants of this technology.

In April, UA launched a new line of golf footwear. Three models were launched: the Tempo Tour retailing at $220, the Drive One retailing at $200, and the Tempo Tour Hybrid retailing at $160.

While competitors Nike (NKE) and Adidas (ADDYY) have faced challenges in the golf category due to pressure faced by the sport, sales of golf apparel have blossomed at Under Armour, spurred by the success of Jordan Spieth, a valuable member of Under Armour’s athlete roster. Thus, UA’s golf footwear could outperform industry growth rates.

Pricing power

Under Armour is targeting $1.7 billion in annual footwear sales by 2018. According to the company, “premiumizing” footwear offerings has led to sales growth. We’ll discuss this more in the next article in this series.

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Browse this series on Market Realist:

• Part 1 - Did Under Armour Beat 1Q16 Earnings Expectations?

• Part 2 - What Drove Under Armour’s 30% Revenue Jump in 1Q16?

• Part 4 - Foot Wars: Why Under Armour’s Shoes Are Selling at Higher Prices