Under Armour To Have A Leg Up In Its Footwear Sales This Year

Under Armour (NYSE:UA) announced in its latest quarter that revenue growth is expected to slow going forward on the back of sluggish demand in the apparel industry. That said, sales in its footwear segment could surpass previous expectations with newly developed technology and ongoing demand for its basketball line. Additionally, in December, the company announced new connected shoes, thereby doubling down on connected footwear. These shoes are one of the many shoes that were announced in 2016, all of which are expected to help Under Armour gain additional traction in the market in 2017.

Footwear sales in 2016 were primarily driven by the basketball and running segments. That said, one must keep in mind that Under Armour is continuously striving to grow in other types of footwear as well. For example, the first 3-D printed cross-trainer called the UA Architect made headlines and impressed critics. The company also managed to launch its first golf shoe, which was worn by pro golfer Jordan Speith during the 2016 Masters Tournament. Apart from these, there were many new styles introduced within baseball, training, fishing, hiking, and various other sports.

Running shoes were an important segment for Under Armour in 2016. Critics were extremely impressed by the company’s relatively inexpensive running shoes called Bandit 2. Basketball was also an impressive growth driver for UA in 2016. The Curry line of shoes continue to benefit from UA sponsored NBA MVP Steph Curry’s success. Despite a slow start for the Curry Three, we expect the footwear business at Under Armour to continue to grow in the mid double digits for the foreseeable future.

As stated previously, Under Armour very recently announced the release of its connected shoes. The newest connected shoes link up to a user’s account on the company’s MapMyRun mobile app. The shoes are designed to enable runners with the digital tools that are required to better understand recovery and consequently maximise performance. Additionally, the shoes use pre-run data to give runners insight into muscle fatigue prior to working out. These three new styles come as upgrades to similar connected shoes that were launched as part of the company’s connected fitness and wearables push in January. However, connected shoes are still a very nascent technology that had little impact on sales in 2016.

Analysts at Global Market Insights expect the footwear market to grow at an average of 3% per year from 2016 to 2023. To put this into perspective, the market in 2015 was valued at close to $80 billion worldwide. So a 3% growth actually represents billions in new sales from both increased unit shipments and higher average prices per shoe. Furthermore, other than the growing market, Under Armour is eating away at the market share held by apparel behemoths like Nike and Adidas. Both these reasons present an increased opportunity for the company. For the first three quarters of 2016, footwear has outpaced every other category in year-over-year sales growth. With all of these new styles announced in 2016, Under Armour’s growth potential in this market continues to rise.

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