Pictures of the Under Armour signature Brandon Jennings basketball shoe continue to trickle out in different colorways. See the Foot Locker exclusive below. The price point is right on this shoe at a penny under $100. The risk associated with attempting a Nike-esque price point and failing would be a disaster for UA. So the approach is to keep the price point reasonable, and keep allocation extremely tight this fall. We still think that footwear will be more additive to the top line that the consensus estimates suggest.
Does that mean that we'd chase the stock here? No. But with the Street so far below the actual earnings (by 25% in 2011) we could see why it looks so expensive. Mind you, people that fought us at $20 on this though it was too expensive. Same thing at $30...and then $40. Anyone looking to short UA based on valuation could continue to be very very frustrated.
The caveat? If the company's spending on athletes goes up given the recent chain of events in the endorsement world (NKE/NFL, Tom Brady wearing Under Armour cleats on Monday night football), then we could potentially be looking at a situation not unlike the Superbowl Ad 2-years back. We don't think that's likely. But as it relates to stock drivers, that's now near the top of the list.