Nike to Under Armour: "Our Q1 losses are lower than your q1 losses"

May 1, 2008

Surely you’ve seen the commercial by now…Nike Sparq Cross Trainer Shoes? The commercials feature many prominent athletes LaDainian Tomlinson & Adrian Peterson among them saying catchy lines like “My fast is faster than your fast”. If you’re like me, you were thinking, “Man, these commercials are pretty catchy. Whatever Nike is selling is about to fly off of the shelves because of these catchy commercials.” Yeah, if you’re like me, you’d be completely wrong. From AdAge,

…Nike’s performance-trainer sales actually declined in March, the first month Sparq shoes were on the market.

“The Nike results have been termed disappointing by retailers,” said Matt Powell, an analyst at SportsOneSource who tracks the footwear industry. “They haven’t moved the needle.”

So, what does Nike’s less than spectacular performance mean for Under Armour’s new cross-trainer? Well, it certainly isn’t positive news, especially considering that both sides are throwing large amounts of money behind a shoe that is basically a surplus shoe (athletes use cross-trainers when they aren’t using the shoe for their sport) and a market that is only worth $250 million dollars in a $19 billion dollar shoe industry.

To make matters worse, Under Armour has already spent 37% of their entire 2007 advertising budget on commercials during the Super Bowl. That would be okay, except for that whole “recession” the country is mired in. Under Armour reported a 71% drop in first quarter profits (compared to Q1 of 2007) and lowered its predicted annual profits to $103.5-104.5M, down from its previous estimate of $108.5-110.5M.

Apparently, flashy commercials aren’t really worth that much if its an unnecessary product in a slow economy…who knew?

AdAge: Under Armour hopes to outrun Nike