Nike Vs. Under Amour: How Has This NBA Trilogy Played Out For These Sportswear Titans?

Nike Vs. Under Amour: How Has This NBA Trilogy Played Out For These Sportswear Titans?

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by: Brett Hershman, Benzinga Staff Writer

 

As the Cleveland Cavaliers face elimination in Game 5 of the NBA finals, they find themselves at a very familiar 3–1 deficit.

The NBA as a whole has found itself in a quite a familiar spot as well this June, a month in which the Warriors and the Cavaliers have faced each other three straight times in the finals, with alternating championship wins.

While little has changed between Cleveland and Golden State, except one very big addition by the Warriors, the battle between Nike Inc(NYSE: NKE) and Under Armour Inc (NYSE: UAA) has significantly changed since these two teams met in June of 2015.

In Steph Curry’s first Finals appearance two years ago, the battle of the sportswear giants Nike and Under Armour was really starting to heat up. Nike had a complete dominate share of the basketball footwear market (north of 95 percent), and adidas AG (ADR) (OTC: ADDYY) was teetering on the brink of irrelevance.

While Curry continued to dazzle fans with his 3-point range and shooting ability unlike anything the NBA had ever seen before, Under Armour was capitalizing on the star's momentum, with an aggressive push into basketball footwear. The opportunity was ripe to steal market share away from Nike behind one of the brightest stars in the league.

 

Under Armour Setbacks

Under Armour’s stock continued to soar after the Warriors their first NBA championship in 40 years. The momentum was there for the company, which then aggressively stated it wanted to build a $1 billion basketball business around Curry.

Following several disappointing subsequent Curry shoe releases, LeBron James’ dominance in the 2016 Finals that saw an 3–1 unprecedented comeback and a PR blunder where CEO Kevin Plank aligned himself with President Donald Trump, Under Armour has found itself in a much different position this time around. Shares of the company sunk over 44 percent since the win two years ago, and footwear sales have grown just 2 percent year over year in the first quarter.

 

Top 5 NBA Signature Shoe Sales

As of March 2017, per NPD Group.

    1. LeBron James (Nike).
    2. Kyrie Irving (Nike).
    3. Stephen Curry (Under Armour).
    4. Kevin Durant (Nike).
    5. James Harden (Adidas).

 

Rebuilding The House

Under Armour may be on a better, more conservative course this time around. The Curry 4 received a much-needed favorable response on social media during the finals. Wells Fargo also saw the response as a bright spot moving forward.

“We are encouraged (cautiously) by the prospects for the Curry 4 shoe, and the potential “halo effect” it could have on the brand,” said Wells Fargo analyst Tom Nikic, after Curry unveiled the shoe in Game 1.

The company will likely take a different approach to the shoes release in the Fall, with less inventory as retailers gauge interest. Under Armour’s flagship star will also take his annual trip to Asia to market the shoe on a global scale, this time going traveling with his brother, Seth.

 

Adidas Has Become The Real Growth Story

Nike, on the other hand, has also experienced notable struggles over the past two years, with basketball footwear trending negatively and Adidas surging in North America. Nike’s footwear sales grew just four percent in the most recent quarter, while Adidas as a whole grew 31 percent in North America as of its most recent quarter.

The German sportswear brand hasn’t had much of a presence in basketball during this time, instead was focusing on creating relevant fashionable styles and connecting with the modern day consumer. Shares of Adidas have soared over the past two years, gaining 143 percent and reaching all time highs, while Nike delivered a paltry 4-percent gain over the same timeframe.

Despite having virtually no presence in the NBA finals, Adidas continues to be the hot story in the athletic apparel space. Under Armour is writing their comeback story, while Nike weathers market-share losses and repositions itself toward dominance.

Starting next season, all three companies will have to compete with a notable entrant into the NBA signature shoe market as well.

 

© 2017 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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2 responses to “Nike Vs. Under Amour: How Has This NBA Trilogy Played Out For These Sportswear Titans?”

  1. Instimg says:

    Thank you for sharing the post! Adidas getting more famous in the past two years, their designs are very nice, not only suitable for athletes, but also for common customers. Nike still a big empire, let's wait for their new products. After all, I like all of them, not a fan of any particular brand.
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  2. It supports on all BlackBerry phones Z10, Z30, Z3, Q5, Q10, P9982, P9983, Passport, Standard, Leap, Priv, as well as others.

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