Under Armour has built a brand catering to the hard-core athlete, with its tight muscle shirts and commercials that often star grunting, sweaty professional sports players.
Now the Baltimore sports apparel company is introducing a cotton line that may be more appealing to those of us with softer physiques.
Company Chairman and CEO Kevin Plank said the line, with the same "sweat wicking" capabilities as its other apparel, would come out next year, ending months of industry speculation. He made the announcement during a call with analysts to discuss third-quarter earnings Tuesday.
The cotton line is the latest product evolution for the company as it realizes not all athletes are built the same. Its women's line has become more fashionable in recent years, scrapping what was once a shrunken version of its men's clothing. It also sells a fitted line, which is a little less tight than the compression wear. And this winter the company is marketing a new cold gear line called Evo-ColdGear, which has a fitted silhouette with a looser fit.
Analysts predicted that cotton would appeal to those who like the "sweat wicking" technology of Under Armour apparel, but not the skin-tight fit and slick feel of the traditional compression wear it was founded on more than a decade ago — and with which the company made its mark in a highly competitive industry.
"There is going to be a broader mix to allow a broader customer base or consumer demographic to come to the brand," said Sam Poser, an analyst with Sterne Agee. "Cotton is easier to wear and there is the same performance aspect."
Plank didn't reveal many details about the line, which analysts have been talking about for months but the company only confirmed Tuesday. He said further information would be disclosed in future quarters.
Plank is a former football player himself who started Under Armour because of memories of his days playing in cotton T-shirts that became heavy with sweat after play. Football players were his first customers.
He was known to tell analysts in the past that "cotton is the enemy." Now he is bringing it into the folds of the company.
"This evolution will introduce Under Armour to a whole new audience of consumers while bringing a new level of performance to a category where expectations for it have been low," Plank said during the call. "We're confident this innovation will expand both the reach and equity of our brand."
Michael Binetti of UBS Securities LLC, in a recent research report, described the new line of apparel as "coated cotton that wicks moisture from the skin but still has its cotton feel." He said cotton could be "a longtime growth driver for the company."
Plank also talked about the performance of Under Armour's new basketball shoe, which hit stores last weekend in limited quantities. The industry is watching the success of the shoe closely because Under Armour's footwear strategy has struggled. Plank didn't release sales details.
"While a few days of sell-through aren't an accurate measure of how well we've been received, we are much more confident about our entry into this important category," Plank said. "By the time our first basketball footwear arrived in stores last week, literally hundreds of the country's best players have tried our product and given feedback. This process has helped us deliver a basketball shoe… that gives this confidence that we will see a returned growth in our footwear business in 2011."
Matt Powell, chief analyst at research company SportsONESource, did not have sales figures Tuesday for the basketball sneaker, but said retailers found the shoe didn't sell as well as expected.
"I thought with a limited launch we would see a much faster sellout," Powell said. "When you only put a handful of pairs out there you generally see a frenzy, and that didn't happen."
Under Armour also said it was raising its outlook for the year as it has continued to enjoy better-than-expected sales of its products.
It expects full-year revenue in the range of $1.03 billion to $1.035 billion, an increase of about 20 percent over last year. It had initially predicted revenue in the range of $990 million to $1.01 billion, a 16 percent to 18 percent increase from a year ago.
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