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June 28, 2010

Finish Line’s management team slipped on Friday, giving indication that Under Armour’s basketball product is on the way sooner that many may think.


Finish Line’s management team slipped on Friday, giving indication that Under Armour’s basketball product is on the way sooner that many may think. So many people we talk with seem to blindly accept that UA footwear will not meaningfully push until 2H11. But c’mon… don’t you think that management would buy themselves just a little time to execute this initiative? After the first go around, where results were so-so at best, they’re not going to get this wrong. That’s not because it’s written in the cosmos, it’s because they’ve proactively invested for it, beginning last summer. I don’t believe that basketball will be UA’s saving grace, but will be one of the many categories that allows the company to take this from being a $150mm footwear brand, to being a $1bn brand.  

R3: FINL’s ‘Whoops’ on UA Footwear - UA Youtube 

Kevin Plank Q4 08 CC (January 29, 2009)Beyond running footwear, there are growth opportunities for us long-term in soccer boots and eventually once the product is

ready, basketball.”

Kevin Plank Q1 09 CC (April 28, 2009)“We have no designated date as to when we will be launching basketball, other than the fact that exactly when we are ready.” …  “But again we believe that we are going to be very important in basketball. We also believe that we have the luxury of being patient as to the point when we decide to enter that market. And we will do so, frankly, first and foremost and only when the product is 100% ready. So we're biding our time and going to make a strategic decision around that.”

David McCreight Q2 09 CC (July 28, 2009)As it relates to basketball we currently are already on court. We'll continue to read the market place there and roll out when appropriate.”

Kevin Plank Q3 09 CC (October 27, 2009)We've got 20 Elite high schools. We've got Brandon Jennings in the NBA, so we have presence and we more importantly have feedback from all levels of competition

and we will be evaluating and making those decisions to go at it, first and foremost when the product is ready and when we're ready to support it and tell a big story. Go heavy or go home.”

Kevin Plank Q4 09 CC (January 28, 2010)Being a great footwear company is not just about making a big splash with launched products, and we have no major footwear launches planned for 2010. However, we are developing our basketball footwear and positioning for a future launch. While you won't be able to find Under Armour basketball footwear for sale at retail, you will find it being tested and authenticated throughout 2010 on the feet of ten Division I basketball programs, more than 20 top high school programs, as well as on the feet of NBA Rookie of the Year contender, Brandon Jennings. We can be patient because of the multiple growth levers that

allow us the patience to prioritize.”

Kevin Plank Q1 10 CC (April 27, 2010)As it relates to basketball, number one, we are very committed to getting into this category. And for us it's not a question of if as much as it's a question of when.” … “I think we are very, very pleased, I think, with the progress we've made to date. And I think we're frankly sitting in the catbird as to the timing and when we choose to enter this category. And I think we'll be opportunistic with that approach, but it doesn't have to be something we can force. And, frankly, as you can see, with the strong Apparel business we can use timing to our advantage and are not forced from a revenue standpoint. So the answer to that is we're not making any declarations as to when we're going to enter the market. But when we do we'll walk in with a point of view and we'll enter with strength.”

Sam Sato FINL Q4 09 CC (June 25, 2010)"As we move into Q3 and beyond, Reebok under the Zig Tech is introducing a basketball shoe as is Under Armor and we've seen both of those and put orders against that and think there's a tremendous opportunity for us to capture some business in that category as well."


-Finish Line noted that it is developing a couple of prototype concepts in conjunction with Nike. The first is a shop-in-shop concept focused on Nike Running. The second is a prototype focused on showcasing Brand Jordan. Both tests are in development with no specific rollout plans at the moment. However, management is bullish on the opportunity for running and suggested this could be a big opportunity over time.


- A new study suggests reusable shopping bags are full of bacteria and should be washed frequently. The University of Arizona study found that 12% of its sample bags (collected from Tuscon, LA, and San Francisco) contained e. coli. Maybe disposable bags weren’t so bad after all?


- In one of the more unique sponsorship opportunities we’ve seen, Old Navy is the official retail sponsor of this year’s Coney Island hot dog eating competition. Old Navy has created a custom shirt that competitors will wear, which will also be available for purchase in 1,000 Old Navy stores. This is just sad...



The Great Trade Down Continues - Americans are continuing to trade down in greater numbers in the wake of the economic downturn, even as consumers in other developed markets begin to lose their taste for bargain hunting. Trade Down findings from a Boston Consulting Group report called “A New World Order of Consumption.” 2010 survey results show that trading down is still going strong in most markets, but it has fallen from the overall peak level found in late 2008. Trading down continues to gain strength in the United States, where it is up 5% over 2008 levels. In the last study two years ago, 48% of Americans indicated they were trading down, this year 53%. 18% said they were trading up and 29% said they weren’t changing their spending mentality. 51% of European respondents indicated they were trading down this year, off from 56% in 2008. 56% of U.S. respondents indicated they were trading down on their own apparel purchases, versus 19% who were trading up. In the beauty realm, 52% were trading down on facial skin care and cosmetics, versus 21% who were trading up.  <wwd.com/business-news>

Hedgeye Retail’s Take: We wonder if the retailers who benefitted the most from the ‘Trade Down Factor’ – Dollar Stores – are paying attention. 


FIFA Acknowledges Problems with World Cup Ball - FIFA has finally acknowledged that there may be something wrong with the Jabulani World Cup ball, but won't act on the problem until after the tournament. <sportsonesource.com>

Hedgeye Retail’s Take: This is like a broken record. Same thing happened with the Adidas ball in 2006. But really…the issue at hand is that the ball has the appearance of a knuckleball when kicked. But this hardly synchs with a tournament that has been rather low-scoring,  

Chinese Footwear and Apparel Exports to Vietnam Surge - China's footwear, textile and garment accessory exports to Vietnam have increased 45% in the first five months of this year, according to the Vietnam Customs. From January to May, China's textile exports rose 29.69% year on year and apparel exports increased 13.13%. In May, the textile and apparel industry saw total export value reach US$16.43 bn. <fashionnetasia.com>

Hedgeye Retail’s Take: Yes, this coincides with the start of the Asian Free Trade Agreement where a 4% tax between Asian nations was put to bed starting Jan 1. 

Global Retail M&A on Rebound with Focus in Europe - Already this year, the value of global acquisitions of apparel manufacturers, as well as apparel and shoe, jewelry and department stores jumped 133% to $11.28 bn, according to Dealogic. And Europe led the way with $6.98 bn worth of deals in the four sectors this year, even excluding BCBG Max Azria Group and Nicolas Berggruen’s agreement to buy Karstadt Department Store Group. The global retail M&A dollar figure advanced despite a decline in the number of deals to 207 from 280 at this time last year, indicating companies are starting to take bigger bets as they consider combinations.  <wwd.com/business-news>

Hedgeye Retail’s Take: No shocker here. 


Sport-Haley Acquires Bette & Court Golf - Sport-Haley, Inc., the maker of golf and lifestyle apparel, completed the acquisition of all of the assets of Fantasi International, Inc., a Florida corporation doing business as Bette & Court Golf. <sportsonesource.com>

Hedgeye Retail’s Take: The interesting part of this is that we’re seeing more activity in the ‘down and out’ golf category. Mre signs of it having found bottom. Probably good for Dick’s/Golf Galaxy.

Athletic Trend: Hiker Hybrids - Athletic brands are taking their style cues from the great outdoors this fall. Blending the classic hiker silhouette with sneaker-based shoes has resulted in a varied collection of looks, from rugged to sleek, understated to over-the-top. Brands with the in style products include: Adidas, Puma, K-Swiss, and other smaller brands. <wwd.com/footwear-news>

Hedgeye Retail’s Take: Makes sense.


Utah Ski and Snowboard Visits up 2% - The Utah ski and snowboard industry closed the 2009-10 winter season this past Sunday with a total of 4,048,153 skier days, up 2% from the 2008-09 season at 3,972,984. Visitation was boost by abundant and late powder. <sportsonesource.com>

Hedgeye Retail’s Take: Nice to see any form of location-based entertainment (most such venues are in a secular decline) show decent growth.