Tuesday, April 15, 2008
On one of the newsletters I subscribe to, Under Armour was recommended. Now there have been an increasing about of testosterone fortified / supplemented ads of muscle bound men screaming at the top of their lungs about how they have to protect their house that I assume they all live in... together? hmmm... OK, OK... I actually know what they are talking about (I know my sports). Which is why I was drawn to this in the first place.
So let's apply some rationale around this.
With athletic companies, you really have to treat them like technology companies operating within the athletic space. You have shoes that feature technology that cushion landings, enhance an athlete's ability to make quick movements, and even clothes that wick the sweat right off your skin so that you aren't bogged down by your own sweat. It's pretty cool what goes into athletic gear today and you can easily get geeked up over it. Technology like Nike Air and Dry Fit technology and Adidas Torsion control and throwing it way back... Reebok Hexalite and Converse React Juice and Hexalite technology all fit the bill. So what does Under Armour have... well... nothing really.
And that is what essentially bothers me. There really isn't a moat to protect it. It's a company who's only real product is their underwear product which wicks away moisture, releases heat and fits skin tight due to it's amazingly high spandex percentage. My only concern is... is it enough? They are now trying to get into other verticals including shoes and other athletic gear however, the product is second rate. So frankly, if there is a moat created by their brand, it's a moat that is very shallow and not very wide. Other companies already have the ability and technology to create a similar product.
The other side of the story is... Could this be the next And1? Like, can it do for cross training what And1 did with basketball. Essentially building a brand around subpar products and a lot of attitude? Quite possibly so.
With that being said. As Mr Buffet say, you want to be very, very selective to what you buy. Frankly, I just can't bring myself to pull the trigger on this one. Just like those manly men in the Under Armour ads say: I MUST PROTECT THIS HOUSE!!!