I am incredibly impressed with the consistency in price point of Under Armour's cross trainers in the weeks since its launch. In fact, a full 7 weeks after launch, average price is hovering at $80, which has hardly budged off of what we saw in the initial week-1 hype, and it is happening without sacrificing any meaningful unit sale momentum. This is highly unusual for most launches in this space. The football cleat, for example, saw a precipitous decline in price point over the first 2 months (from $85 to $64) back in 2006. The x-trainer launch is being handled extremely well by Under Armour management, in my humble opinion.
My issue with this story has never been with the top-line growth, but with the margin necessary to sustain top line growth. I still believe that to be true, and that the real margin level for UA is 1-2pts lower than what we see today (we'll see higher marketing and sourcing costs than anyone is banking on). But I am definitely leaning more towards the camp that better top line could offset some of this in 2H08. Estimates still look too high, but maybe not as high as they looked before the current trends I'm seeing in footwear.
Chart below shows price point for football cleats vs cross trainers in the 7 weeks post-launch for each product. Source: NPD Fashionworld.
My issue with this story has never been with the top-line growth, but with the margin necessary to sustain top line growth. I still believe that to be true, and that the real margin level for UA is 1-2pts lower than what we see today (we'll see higher marketing and sourcing costs than anyone is banking on). But I am definitely leaning more towards the camp that better top line could offset some of this in 2H08. Estimates still look too high, but maybe not as high as they looked before the current trends I'm seeing in footwear.
Chart below shows price point for football cleats vs cross trainers in the 7 weeks post-launch for each product. Source: NPD Fashionworld.
