The debut of Under Armour Inc.’s (UAA) new $300 ArchiTect Futurist shoe indicates the athletic apparel manufacturer and shoe maker is still aiming upmarket with its growing footwear businesses.
The Baltimore-based sportswear company has made similar strides into the premium product space with its expensive Under Armour Sportswear line, priced above its rivals in the booming North American “athleisure” space.
Under Armour says its ArchiTech Futurist running shoe "weaves together Under Armour's past, present, and future of changing the way athletes dress." The $300 shoe’s next-gen design comes with high-tech features such as a 3D-printed midsole, and promises to provide “infinite cushioning and support.” The shoes are the most expensive in the company's history.
Nike’s 'Most Successful Launch'
ArchiTech Futurist’s release follows Nike Inc.’s (NKE) announcement that its latest Space Jam XI shoe, priced at $220, was its most successful and largest shoe launch in the history of the company. The world’s largest sportswear manufacturer indicated the Space Jam XI was a bright spot in an otherwise disappointing quarterly earnings report, as investors worry about German-based Adidas AG’s (ADDYY) mounting competitive pressure on its U.S.-based industry peers. (See also: UBS on Nike: Will ‘Get Darker Before the Dawn’.)
As retro-inspired “classic shoes” such as the Space Jam XI gain traction with consumers, boosting Adidas’ earnings above expectations and propelling the stock to new highs, Under Armour decides to get in on the trend despite lacking the long-standing brand name of its peers.
Under Armour Playing Both Discount and Luxury Markets
In contrast to the recent premium product release, earlier this week, investors sent shares of Under Armour down on perceived brand-image risk from a new partnership with discount retailer DSW Inc. (DSW). As Under Armour is traditionally considered somewhat of a premium brand, and its shoe business has relatively lower margins than its other segments, investors were concerned the firm was risking its pricing power and long-term margin profile in efforts to boost top line numbers via downmarket distribution partnerships. (See also: Under Armour’s New DSW Deal Worries Investors.)