Under Armour (NYSE: UA) shareholders may want to worry. Nike (NYSE: NKE) announced on Monday that it is launching Nike Sparq Training, which will combine "high performance products, online experiences at nike.com, a new association with Velocity Sports Performance Centers, and a multi-media campaign called 'My Better.'"
The product line will include footwear, apparel and equipment in partnership with Sparq Training.
This appears to be Nike's strongest attack on Under Armour's center of strength to date. And here's the problem: With a strong brand and financial resources that dwarf Under Armour's, Nike would appear to have a very good shot at crushing Under Armour's market share.
In a battle for market share, Nike can outspend Under Armour on advertising and sustain losses if necessary. As an aside, in my recent visits to discount stores like Marshalls and TJMaxx, I have found large quantities of Under Armour merchandise.
Under Armour has been a strong performer because of a first mover advantage, but as Charlie Munger once said, very few businesses have a future as good as their past. Under Armour's past success has attracted a deep-pocketed competitor, and that could hobble its future.
The product line will include footwear, apparel and equipment in partnership with Sparq Training.
This appears to be Nike's strongest attack on Under Armour's center of strength to date. And here's the problem: With a strong brand and financial resources that dwarf Under Armour's, Nike would appear to have a very good shot at crushing Under Armour's market share.
In a battle for market share, Nike can outspend Under Armour on advertising and sustain losses if necessary. As an aside, in my recent visits to discount stores like Marshalls and TJMaxx, I have found large quantities of Under Armour merchandise.
Under Armour has been a strong performer because of a first mover advantage, but as Charlie Munger once said, very few businesses have a future as good as their past. Under Armour's past success has attracted a deep-pocketed competitor, and that could hobble its future.
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