Sports apparel sales trends are starting to bug me. There’s noise around this week’s SportscanINFO numbers due to the timing of Thanksgiving, but looking at the 3-week trend (what we do anyway) suggests flattish industry wide sales. Not a disaster by any means relative to other parts of retail. But the fact that the trajectory in average price point is dropping like a stone is not comforting. Promotions are happening early, though the silver lining is that they’re working – and that unit sales are climbing at about the rate of price point declines.
Bottom line. Stick with the market share winners, and companies that are growing outside of this core sports apparel category. Under Armour’s trends remain fine in apparel. Still gaining share in its core training business (48% of total), and recent Compression category share trend has rebounded (and remains at 70% of the category). Also, expect to see running and basketball apparel step up in ’09 in conjunction with UA’s ‘year of footwear’ (when it gets into running and basketball footwear). These are two categories where I think that UA can realistically add $500mm in revenue on top of its $750mm base over 3 years while maintaining a 10-11% EBIT margin. Tough to find a 20%+ grower in any industry these days.