EVERYBODY’S RUNNING IN 2009

The running category is going to be a share war in 2009. UA will emerge a winner…NKE will sustain at all costs…AdiBok has its back against the wall.

The Running category is going to have its share of fireworks in 2009. For starters, Under Armour is making a big push into the space – and my strong view is that UA will succeed. The company is going in at price points averaging around $90, which is at the very high end of what runners will pay, and they’re going about the R&D and marketing in all the right ways. Huge opportunity for UA given that this is a $5bn category at retail. Nike owns this category with 65% share, and the next largest brand (Asics) at 15%. Past that, there are several more brands that bring up the rear in the 2-6% range. UA is not even on the map. The consumer genuinely wants this brand to succeed. Don’t underestimate that. Every point of share is 3-4% top line growth to UA (not including running apparel). I still don’t see why this company cannot have 3-5% of the US footwear industry over 3 years, which alone grows UA by 2/3.

But what about everyone else? Asics and Saucony (owned by Payless) each garner over 80% of sales from running, and they’ll put up a fight. New Balance is 32%, and will put up a fight as well. This is not to mention brands like K Swiss that are growing into running, and Nike that will defend its turf at all cost. The big loser? I’d hate to be Adidas/Reebok. I personally think neither stands a chance in the US next year. They’re not proactively managing for the tail risk we’re likely to see.