Under Armour launches Curry Brand to take on Nike's Jordan Brand, but timing is not ideal
Under Armor hopes to have found its answer to Nike's hugely successful Jordan brand.
Seven years after the star of the Golden State Warriors, Steph Curry switched from Nike to Under Armor, the Baltimore-based sportswear brand is creating a completely separate brand with its own new logo. (Curry's Alma Mater Davidson University is already wearing jerseys with his new logo.)
Under Armor (UAA) will launch Curry Brand on December 1st, the company announced on Monday, and has postponed the launch of the next Curry signature basketball sneaker to December 11th, just in time for the Christmas shopping season and just before 2021 The NBA season ends December 22nd.
The stand-alone brand will begin with basketball and golf sneakers and clothing and eventually expand to other sports. It will also have a charitable element: a portion of Curry Brand's annual revenue will be "invested in communities with limited resources," the company said. And Curry Brand "wants to create at least 20 safe places to play by 2025" and "support 125 programs that affect young athletes".
"The fact that we start between Black Friday and the holidays," said Patrik Frisk, CEO of Under Armor, at CNBC, "we think it's very cheap."
But will kids be asking parents about curry basketball sneakers this Christmas?
The performance basketball shoes category has been in decline for five years, and 2020 sales are down 20%, according to Matt Powell, retail analyst for the NPD Group. The category peaked in 2015; Performance basketball now only accounts for 3% of all sports shoes sold.
"It's really going to be a team shoe for a kid who really plays ball and they'll likely be wearing a different fashion brand or style on the court," says Powell. “So the problem for brands with athletes like Curry is that it's really difficult to activate that asset today. I think [Curry Brand] is a creative idea, but I'm not sure we're in an environment where kids buy this brand and wear it on the street, and that's where the money is for streetwear. "
America is also in the midst of a pandemic that has put many youth sports programs on hold so the kids who typically ask for new basketball sneakers on vacation may not need them. (Interestingly, basketball gear sales - think hoops and balls - are rising during the pandemic as kids shoot hoops in their driveway or in the neighborhood.)
Toronto Raptors 'Kawhi Leonard raises his fist for a basket as Golden State Warriors' Steph Curry walks away in the second half of Game 6 of the NBA Basketball Final on Thursday June 13, 2019 in Oakland, Calif. (Frank Gunn / The Canadian Press over AP)
Beyond the timing of the sneaker market, there is the timing of Curry's career on the court.
In February 2015, Under Armor launched Curry's first signature sneaker, the Curry 1. The timing was perfect: Curry led the Warriors to the franchise's first NBA title in 40 years. Curry's Warriors won 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 it went from there. Golden State ended the 2020 season with the worst record in the league. And now Warriors star Klay Thompson, the other half of the shooting duo "Splash Brothers" with Curry, has torn his Achilles tendon and will miss his second season in a row due to injury.
None of this inevitably means the curry label isn't selling well. And Curry remains one of the brightest personalities in the NBA. But the height of his dominance on the pitch may be over.
"I think he's a huge personality, but they signed him and brought out the first shoe at the absolutely perfect time," says Powell, "and now the moment seems to have passed when they could ride this."
Stephen Curry bears the new Curry Brand logo. (Image: Trevor Smith for Under Armor)
On the other hand, Under Armor has been trying for years to make its brand “Premium” (an industry term referring to pricing and image) and the Curry brand could become a central part of that effort.
In North America, Under Armor sales have declined for eight consecutive quarters. However, profit margins improved in the second quarter of 2020 and direct sales to consumers increased 17% in the third quarter of 2020.
Frisk, who inherited a difficult turnaround job when he became CEO in January 2020, said on Yahoo Finance Live in September that he was “repositioning Under Armor as a premium brand”. That means offering a smaller volume of goods at higher prices: shrinking sales, increasing profits. "I think everyone will shrink a bit, right, when they get out of COVID," Frisk said on Yahoo Finance.
As part of its weight loss efforts, Under Armor ditched three expensive school sponsorships (UCLA, Berkley, and Cincinnati) this year and sold MyFitnessPal for less than it paid to purchase five years ago.
BMO Capital Markets' analyst Simeon Siegel sees the launch of the Curry brand as the latest evidence of the brand's plan to shrink to grow. "I think when UA recognizes that it is time to focus on profit over growth, it makes sense to create a new brand that can instead be its engine of growth," he says. "Whether or not that proves this engine will be the question."
Translation: Expect Curry Brand to be more expensive and target other high-end fitness wear labels.
Daniel Roberts is the Editor-in-Chief at Yahoo Finance and is deeply involved in the sports business. Follow him on Twitter at @readDanwrite.
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