The Golden State Warriors and the Cleveland Cavaliers are battling it out in the 2017 NBA Finals, and to say that Under Armour (NYSE:UA)(NYSE:UAA) has a vested interest would be an understatement. The showdown between the two best teams in basketball features no shortage of top talent, but similar to last year, much of the attention is focused on the showdown between Steph Curry and LeBron James. There is also a proxy battle taking place between two of the biggest sports apparel companies -- Curry is the biggest draw in Under Armour's stable of endorsers, while LeBron James is the most popular active player under the Nike (NYSE:NKE) banner.
Under Armour has struggled over the last year with its stock losing nearly half its value, putting the company's upcoming releases and brand strategy under the microscope. That would seem to lend added significance to Curry's championship performance and his recently unveiled new signature shoe.
Can the Curry 4 propel an Under Armour comeback?
Prior to the first game of the NBA Finals series, Curry showed off his latest signature sneaker -- a product that will likely be Under Armour's most important release this year and one that could have a prolonged impact on the company's brand and performance.
Under Armour seems to have scored a significant design win with the Curry 4, which bodes well for sales while boosting the company's overall image. Like Nike and other rivals, its footwear and apparel sales hinge on the extent to which the buying public values its brand, and there have been reasons to be concerned that Under Armour is losing its "cool factor". Recent surveys from Piper Jaffray and Google each suggested that the brand was not popular among teenagers. Criticism for shoes in the Curry 2 and Curry 3 lines also combined with the Golden State Warrior's upset in the 2016 Finals to create some brand challenges for Under Armour.
In April, CEO Kevin Plank touched on the weakness of the Curry 3 release during the first quarter earnings call:
As we launched the Curry 3 late last year, our expectations continue to run high. And while the 3 plays very well on court for Stephen Curry and our athletes, a sluggish signature market and a warm consumer reception has led to softer-than-expected results. This has created an inventory imbalance that we're working through, one that, yes, is baked into our full-year outlook, which hasn't changed and, most importantly, yield the lessons we're applying ahead with the Curry 4 and beyond.
The company's most recent quarter saw footwear sales grow just 2% despite overall international sales being up 52%. Though domestic shoe sales were unimpressive, a hot new design for the Curry 4 and the Warriors' dominating performance in this year's finals could reignite demand for Under Armour's most important shoe line.
People love a winner
Viewership for the NBA Finals has been phenomenal so far and if the Warriors can put the series away this Friday, Under Armour should enjoy strong momentum as it prepares to roll out the Curry 4. A release date and pricing details for the shoes have yet to be announced.
Meanwhile, Nike is hoping that the Cavaliers are able to pull off another major comeback to win their second NBA Finals championship in as many years. However, its celebrity endorsements are more diversified when it comes to the rosters of the two Finals teams, thanks to its partnership with Golden State star and potential Finals MVP Kevin Durant. Over the 12-month period ending March 31, Durant's signature shoe sales were the fourth-best performers among active NBA players, while LeBron James and his teammate Kyrie Irving came in first and second, respectively. Steph Curry took the No. 3 spot.
Nike also has its Jordan brand and years of industry dominance to fall back on, so a dethroning of King James and the Cleveland Cavaliers in this year's Finals should not take a significant toll on the company's outlook. But for Under Armour, a younger, smaller company with a brand story on unsteady ground, a Finals sweep for the Warriors and successful reboot of Curry's signature shoe line could have a lasting impact.