• It's Here!

    Etf Pro

    Get the big financial market moves right, bullish or bearish with Hedgeye’s ETF Pro.

  • It's Coming...

    MARKET EDGES

    Identify global risks and opportunities with essential macro intel using Hedgeye’s Market Edges.

Some interesting observations about Nike/Under Armour footwear from Jeff Dawson, a Research Edge intern who we are begrudgingly letting return to Yale University for his senior year.

Tobacco Road doesn’t offer much in terms of serenity. The hostile eight mile stretch along the “Fifteen Five-o-One” country road has been stamped by the “Just do it” travelers. It reminds all that one thing is for certain: Nike is boss. Whether you are a Dukie or a Tar Heel, you have the power of the swoosh behind you. Although intense rivals, both universities rep the color blue and whole-heartedly back Nike (NKE).

This Nike euphoria allows foes from rival schools to be friendly. Michael Jordan, a product of UNC basketball, stands as Nike’s poster child while Coach Krzyzewski of Duke University currently represents NKE on behalf of the USA Olympic Basketball team. Interestingly enough, 11 of the 12 NBA players selected to the team are endorsed by NKE and will be wearing the blue NKE Olympic jerseys. That’s a whole lotta blue power for NKE.

So how can UA compete against this blue wave? The answer… break tradition. After sitting through the Under Armour 2008 Investor Appreciation Day call on May 29th, I strictly remember UA stating that they would keep advertising consistent with the specialty idea “Protect this House”. It gives people a mantra… no star athletes. No athlete is bigger than the brand and UA stands by that. Well apparently the case of the SWOOSH BLUES is just too contagious.

Under Armour will now be teaming up with The Sports Authority and Chicago Bear’s star punt returner Devin Hester on ESPN. Devin Hester is well known throughout the league for breaking the NFL record of most punt returns in a season. He is a star. Oh, and by the way, he also wears a blue jersey for the Chicago Bears. Stealing a page out of Nike’s blue history book… I think so.

Only time will tell whether UA’s new footwear additions will help win over some of that blue Nike (NKE) market share. At Research Edge, we think that UA will gain share but it will come right out of Adidas’ and Reebok’s pockets. For the meantime, UA better hope Devin Hester doesn’t run out of bounds at only the 25 yd line.

Some recent Nike market share statistics:
• Nike is up 4.9% for this month’s Year over Year change, while its ASP is up a whopping 11.7%.

• While the Athletic Low Performance Industry is down (21%) Year over Year for the month, Nike’s Low Performance category is a positive 24%. (45 point swing Nike boasts over the Low Performance Industry).

• Nike is gaining upward of 3% YoY total market share for the month of July.

Jeff Dawson
RESEARCH EDGE