Word: armour
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...know, one that sounds like a roaring, rollicking Swoosh? Nike, the $18 billion sporting giant, knows a tough competitor when it sees one, and when it sees one, it attacks. So it surprised no one that as Under Armour announced it would try to revive the long-dead cross-training category (which basically describes shoes you can use to run, lift weights, jump rope or channel surf), Nike pounced. The company launched its SPARQ trainers--as the company puts it, kicks built for Speed, Power, Agility, Reaction and Quickness--a month ahead of the May debut of Under Armour...
Nike is trying to relaunch cross-training and deny the space to Under Armour. (The aerobics craze made Reebok, remember.) The Swoosh blitzed the airwaves with SPARQ ads during the NCAA basketball tournament; MY BETTER IS BETTER THAN YOUR BETTER went the tagline. SPARQs retail for $70 to $90, while Under Armour's shoes are in the $80-to-$100 price range...
...just marketing. Both Nike and Under Armour are latching onto a new approach to training that's more dynamic than lifting weights and sprinting. At Nike.com athletes can access drill videos from "SPARQ Master Trainers": You're a basketball player, and you want to improve your quickness? Have your coach drop tennis balls at your feet, and catch them before they bounce above your knees. Under Armour will also post cross-training drills on its site this summer. "Nike is going after them with a vengeance," says John Shanley, an analyst at Susquehanna Financial Group. "They want to make sure...
...would Under Armour risk the punishment? The company's apparel business is solid--up 37% in 2007--so Under Armour certainly doesn't need to jump into a new category to grow. "Maybe I'm a little naive as we approach the footwear market," says Plank, a former University of Maryland football player who started the company in his grandmother's basement more than a decade ago. "Maybe we don't recognize the fact that we're walking on a tightrope on the 55th floor. But the fact of the matter is, it feels right. And that's what brands...
...stock market doesn't feel that way. In January, when Under Armour announced heavy marketing costs, including a $4.4 million Super Bowl ad for the launch of the training shoe, its stock dropped 33%, to $28.80 a share, over a two-day period. Under Armour also announced that $28 million in first-quarter marketing expenses, an increase of 103%, helped send profits down 71% for that quarter...