Under Armour’s goal is to surpass Nike in shoes
Matt Townsend, Bloomberg News
Bloomberg October 23, 2010 04:00 AM Copyright Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Saturday, October 23, 2010
Under Armour Inc. Chief Executive Officer Kevin Plank beat the odds in college when he walked on to the University of Maryland football team and eventually became a captain. His next challenge could make that feat look easy.
Today, Under Armour is launching a basketball shoe line, called Micro G, to take on Nike Inc. It’s all part of Plank’s quest to become “the biggest, baddest apparel brand on the planet.” Plank has recruited three Nike veterans to help him succeed after previous efforts to move into athletic shoes left Under Armour with 1.1 percent of the market, according to the research group SportsOneSource.
If Plank harbors doubts about taking on Nike, which dominates the $2.5 billion U.S. basketball shoe market, he isn’t saying.
“Our goal for getting into basketball is to be No. 1,” he said in a telephone interview. “I’m 38. I’ve got a long time.” As for Nike, he added, “those guys are old.”
With his foray into basketball shoes, Plank confronts not just Nike’s 95 percent market share and the billions it spends on marketing. Sales of basketball shoes in the United States have slid for the past three years as fewer people play the sport, said SportsOneSource analyst Matt Powell.
Under Armour has learned from previous missteps, said Plank, who called the decision to buy a Super Bowl ad in 2008, three months before a training shoe hit stores, “pretty cocky.” The four-fold sales growth of Under Armour’s sweat-wicking apparel over the past five years led the company to underestimate the challenge of moving into footwear, he said.
Most of the company’s outlet stores didn’t carry the shoes and they were hard to find on Under Armour’s website. “You look back and think, ‘How did we make that mistake?’” Plank said.
This time, Plank reached outside the company for expertise, hiring Eugene McCarthy, who previously ran Nike’s Jordan brand, to be senior vice president of footwear. McCarthy pushed the reset button on the entire business.
McCarthy added Nike veterans Dave Dombrow as creative director and Charlie Brown as sourcing chief and moved two-thirds of the 90-member staff into new positions. He also decided to revamp the running and training shoes and put a priority on getting rid of unsold shoes at stores to make way for new versions next year.
The release of the Micro G, promoted by Brandon Jennings of the NBA’s Milwaukee Bucks, will be a less splashy affair, said Plank. There are no big ad buys. A small number of pairs will land at national retailers, such as Foot Locker Inc., and urban chains to create pent-up demand that the previous shoes lacked.
As Plank prepared for the Micro G launch, he exhorted his employees to start thinking of Under Armour as a footwear brand, not just an apparel maker. He told them to cut the word “apparel” from voice-mail messages and trashed a mat in the company’s headquarters featuring the word.
“I called our marketing team and said go through this building and find anything that says we are only an apparel brand and throw it away,” Plank said. “We are Under Armour performance. We are going to live it. We’re going to walk it. We’re going to breathe it. We’re going to talk it and we’re going to believe it.”
This article appeared on page D - 3 of the San Francisco Chronicle
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