The time is now for Under Armour and Steph Curry.
After founder and CEO Kevin Plank warned investors Tuesday that the company's growth rate through 2018 will be slower than initially promised, Under Armour's stock took its biggest single day tumble in nearly eight years. Overall, the stock is down 20 percent over the previous 12 months.
Those bits of bad news came two days before the Curry 3, the newest sneaker from Steph Curry's hugely popular line, is set to hit stores.
All this is pointing toward an important release for the apparel company. The most recent shoes from Curry's line, the Curry 2 Chefs, were viciously and hilariously roasted by the Internet due to their supposed resemblance to something a dad (or an ER nurse) would wear. Under Armour's footwear sales didn't suffer--they rose 42 percent year-over-year to $279 million last quarter. Still, one would have to think a company can only have its products turned into memes so many times before it loses some of its cool factor, especially critical in the 8-to-18 demographic that UA's sneakers target.
The company said yesterday on an earnings call that it's still targeting a revenue of $7.5 billion by 2018, a goal it laid out last year. But, Plank said it will now take more investments and promotions to achieve that end, so growth rates won't be as high as they have been in the past. The company's growth rate in North America came in at 15.6 percent in the third quarter. That number had been at 20 percent or more in 26 straight quarters.
"Despite the overall robustness, there are a few emerging signs that Under Armour is now headed into a tougher period," Conlumino retail analyst Carter Harrison told CNBC. "Foremost among these is the lower domestic growth rate within North America."
Still, the company is certainly growing: Its $1.47 billion in sales last quarter were up from $1.2 billion a year ago. The growth just isn't happening as quickly as it once was.
Plank pointed to the closing of The Sports Authority retail outlets as a factor in the slowdown. He said the company is "making investments in places we know can win" with an emphasis on both footwear and international expansion, according to Fox Business.
Under Armour's revenues totaled about $4 billion last year and should approach $5 billion this year. According to ESPN's Darren Rovell, footwear now accounts for about a quarter of the company's sales, with Curry's shoes alone doing $200 million. So the success of Curry's products are not insignificant when it comes to the company's bottom line. Inc. reached out to Under Armour for this story but did not receive a response.
The new Curry 3s are a slight departure from Curry's previous sneakers, which prominently featured the interlocking "UA" Under Armor logo on the side. The Curry 3's feature a smaller version on the shoe's tongue, which the company told Rovell is due more to the shoe's contours than to an attempt to minimize the branding.
The sneakers use a new breathable material, which the company has dubbed Threadborne, that's similar to the stretchy fabric found in parachutes. Foam-like midsoles provide cushioned support--especially important for Curry, who has a history of ankle injuries.
The timing of the release also coincides with the start of the NBA season. Curry's Golden State Warriors lost the NBA Finals in seven games last season after finishing with the best record in league history during the regular season and taking a 3-1 lead in the series. The team has basically returned its entire roster, plus added superstar Kevin Durant, so anything less than a championship will be considered a huge disappointment.
The commercial released for the Curry 3 this week paints Curry as trying to move beyond last season's loss while wearing his new kicks. Suffice it to say this is an important moment for everyone involved.
The Curry 3s are now available on Under Armour's site, though only in the Warriors' blue-and-gold scheme. They'll be available in stores beginning Thursday, and more color schemes will be rolled out in the coming weeks.