'Chef Curry' Can't Seem To Cook Up A Strong Shoe Rollout For Under Armour
Under Armour Inc (NYSE: UAA) just can’t seem to get it right in the cutthroat shoe industry. Things started to go downhill when the company released its infamous, "Chef Curry 2" model, which got blasted on social media.
The latest Curry 3 colorway release, called the Oxblood leather, is receiving a similar reception across the web.
According to Baird Equity Research, headwinds for Under Armour’s Curry platform continue to mount, following new signs of discounting the Curry 3s and additional negative social media buzz.
“While a strong playoff run for Golden State could re-start momentum for the upcoming Curry3Zero, we think a broader re-set for the line, hopefully later in 2017, may be needed,” Baird Equity Research explained.
Luckily for Under Armour investors, lower expectations may be baked into earnings estimates. The Curry 3’s initial launch was met with a soft reception, and since, weakness from key retailers and other sources has been confirmed. UA basketball has declined >50 percent in the past 13 weeks, according to SSI data. The Curry 3 has been marked down on UA.com and at several key retailers, from $139.99 to $99.99, reflective of ongoing challenges.
Delving Into Under Armour's Decline
A key reason for Under Armour’s decline in the past year has been the move of Kevin Durant to the Golden State Warriors, likely a move Nike Inc (NYSE: NKE) influenced so Under Armour’s flagship endorser had to share the spotlight on the NBA’s best team. Golden State was seen as an Under Armour team in 2016, with the NBA finals pitted as a matchup of Nike versus Under Armour.
Baird Equity Research does not see Curry as less marketable than before; Curry still has the No. 1 selling jersey on NBAstore.com. Under Armour’s struggles likely stem from a fashion shift away from performance basketball, along with increased price competition, when Nike lowered price points on its own signature basketball shoes to compete with Under Armour.
The company’s latest release will be the Curry 3Zero on May 1 at $120. It will be critical for the company to get some positive feedback to turn the sentiment around following several shoe design missteps.
Baird Equity Research has a Buy rating on Under Armour with a $25 price target.
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