Yahoo Finance Under Armour launches Curry Brand to take on Nike's Jordan Brand, but timing is not ideal
Under Armour hopes it has found its answer to Nike’s mega-successful Jordan Brand.
Seven years after Golden State Warriors star Steph Curry switched from Nike to Under Armour, the Baltimore-based sportswear brand is creating an entirely separate brand around him, with its own new logo. (Curry’s alma mater Davidson University is already wearing jerseys with his new logo.)
Under Armour (UAA) will launch Curry Brand on Dec. 1, the company announced on Monday, and has pushed up the launch of the next Curry signature basketball sneaker to Dec. 11, in time for the holiday shopping season and shortly before the 2021 NBA season tips off on Dec. 22.
The standalone brand will start with basketball and golf sneakers and apparel, and will eventually extend to other sports. It also has a charitable element: a minimum 1% of Curry Brand’s annual revenue “will be invested in under-resourced communities,” the company said, and Curry Brand “aims to create at least 20 safe places to play” and “support 125 programs that impact young athletes” by 2025.
“The fact that we’re launching in between Black Friday and the holidays,” Under Armour CEO Patrik Frisk noted on CNBC, “we think is very opportune.”
But will kids be asking parents for Curry basketball sneakers this Christmas?
The “performance” basketball shoe category (sneakers made for playing basketball) has been in decline for five years, and sales in 2020 are down 20%, according to NPD Group retail analyst Matt Powell. The category peaked in 2015; performance basketball now represents just 3% of all athletic shoes sold.
“It’s really becoming a team shoe for a kid who’s really playing ball, and he’s probably wearing some other fashionable brand or style to the court,” says Powell. “So the problem for brands who have athletes like Curry is it’s really hard to activate that asset today. I think [Curry Brand] is a creative idea, but I’m just not really sure we’re in an environment where kids will buy this brand and wear it on the street, and that’s where the money is, in streetwear.”
America is also in the midst of a pandemic that has put many youth sports programs on hold, so the kids who might normally ask for new basketball sneakers for the holidays may not need them. (Interestingly, basketball equipment sales—think hoops and balls—are up during the pandemic, as kids shoot hoops in their driveway or neighborhoods.)
Beyond the sneaker market timing, there’s the timing of Curry’s on-court career.
Under Armour launched Curry’s first signature sneaker, the Curry 1, in February 2015. The timing then was perfect: Curry was leading the Warriors to the franchise’s first NBA title in 40 years. Curry’s Warriors went on to win rings again in 2017 and 2018, three titles in four seasons.
Then the Warriors fell to the Toronto Raptors in the 2019 NBA Finals, and things devolved from there. Golden State finished the 2020 season with the worst record in the league. And now Warriors star Klay Thompson, the other half of the “splash brothers” shooting duo with Curry, has torn his achilles and will miss his second straight season due to injury.
None of that necessarily means the Curry label won’t sell well. And Curry remains one of the brightest personalities in the NBA. But the peak of his on-court dominance may have passed.
“I think he’s a tremendous personality, but they signed him and put out the first shoe at the absolute perfect time,” says Powell, “and now it does feel like the moment has passed when they were able to drive that.”
On the other hand, Under Armour has been in a years-long process of trying to make its brand more “premium” (an industry term that refers to pricing and image), and the Curry Brand could become a pivotal part of that effort.
Under Armour sales in North America have declined for eight consecutive quarters. But in Q2 2020, its profit margins improved, and in Q3 2020, its direct-to-consumer sales jumped 17%.
Frisk, who inherited a tough turnaround job when he became CEO in January 2020, said on Yahoo Finance Live in September that he aims to “reposition Under Armour as a premium brand.” That will mean putting out smaller volume of merchandise at higher prices: shrink revenue, grow profit. “I think everybody will be shrinking somewhat, right, coming out of COVID,” Frisk said on Yahoo Finance.
As part of its slimming-down effort, Under Armour has exited three expensive school sponsorships this year (UCLA, Berkley, and Cincinnati) and sold off MyFitnessPal for less than it paid to acquire it five years ago.
BMO Capital Markets analyst Simeon Siegel sees the Curry Brand launch as the latest proof of the brand’s plan to shrink in order to grow. “I think if UA is acknowledging that it is time to focus on profits over growth, it makes sense to try and create a new brand that can be their growth engine instead,” he says. “Whether this proves that engine or not will be the question.”
Translation: expect Curry Brand to be higher-priced and take aim at other high-end performance fitness apparel labels.
—
Daniel Roberts is an editor-at-large at Yahoo Finance and closely covers sports business. Follow him on Twitter at @readDanwrite.
Read more:
Under Armour exits yet another school sponsorship deal as part of big shrink
Under Armour CEO: ‘Everybody will be shrinking somewhat coming out of COVID’
3 signs Under Armour is ‘shrinking to grow’
Why Dick's Sporting Goods is wildly outperforming amid the pandemic
Under Armour has a chance to radically shift its strategy—but will it?
Walmart and Target huge e-commerce gains are a blaring siren to brick-and-mortar retail
