Under Armour has debuted a new, $130 running shoe that will land on retail shelves next year — the athletic-gear company’s latest bid to make a bigger dent in the competitive world of running.
Called the Speedform Gemini, Under Armour’s new shoe that has cushioning that hasn’t been used in any of the company’s earlier shoes. Although the bulk of athletic shoes sold in the U.S. aren’t used for participating in sports, Under Armour said this shoe is meant for dedicated runners. Dave Dombrow, vice president of footwear design, said the shoe was designed “as a shoe for running, we want people running the marathon, the half marathon, any distance. It was originally designed for going long.”
The footwear market is a unique growth area for Under Armour (UA), which unlike many athletic-gear makers, generates more sales from apparel than from footwear. The company’s footwear sales leapt 42% to $345.2 million for the first nine months of 2014 from a year ago, though apparel sales for that period were a loftier $1.58 billion.
Kip Fulks, head of footwear at Under Armour, said the company’s initial success in the apparel business is a strength as it considers new product development for footwear. Under Armour is even going to produce the Speedform Gemini in an apparel factory.
“We weren’t experts at traditional shoe building,” Fulks said. “A breathe of fresh air is needed to occasionally shake up the industry.”
And Under Armour has certainly been investing in the business, which executives say can be as big — if not bigger — than apparel some day. Under Armour is planning to add a new technology to its shoes once a year, and the company’s Portland, Ore., office, which started with four employees, now has 40.
Many media headlines have pitted Under Armour against Nike (NKE) in a battle for the U.S. runner, but analysts note it is still a David and Goliath story, at least for now. Under Armour sold $122 million in shoes for the latest quarter, while it takes Nike just three days to reach that total, according to NPD Group analyst Matt Powell. Under Armour would have to grow its business 50% every year for the next nine years to reach Nike’s volume, Powell said, and that assumes Nike would stop growing — which it isn’t.
“Under Armour is a terrific brand and a great growth story, I think they are a wonderful company with great potential,” Powell said. “But they have a long way to go to catch up to Nike–and the problem is Nike is growing very quickly for a huge company.”
Nike’s footwear sales are still running strong, climbing 18% to $4.7 billion for the latest quarter to easily hold the top global market share position. Since the beginning of this year, Nike has captured 40% of the market share for running shoes purchased online, according to data measured by Slice Intelligence. Under Armour’s market share was at around 1% for that period, Slice said.
To further highlight the distance between the rivals, at an event in New York City last week where Nike showcased its plans to more aggressively address the women’s market, the company flew in a handful of Olympic gold medalist runners to make an appearance, including Joan Benoit, Sanya Richards-Ross and Allyson Felix. Under Armour’s event, at a much smaller scale, featured just two of its sponsored runners: Nick Arciniaga and Chris McCormack.
But Under Armour’s event was exceptionally well timed. It comes just a few days before New York City will host its massive marathon, where both Arciniaga and McCormack will run. Of the two, Arciniaga is more well positioned to place among the top handful of men competing on Sunday, especially after he finished seventh overall at the Boston Marathon earlier this year.
Arciniaga has been an Under Armour sponsored athlete for the past six months, after working with German-based Adidas previously. He first raced in a pair of Under Armour shoes at the Boston Marathon this year — wearing the shoes for only the second time ever during that race and finishing just 17 seconds off his personal record.
“The way Under Armour has been treating me has increased my confidence in myself, they treat me like a rock star,” Arciniaga said. “The [Under Armour] shoes just work for me.”
