Under Armour (NYSE:UAA) released a suite of Connected Fitness products at the Consumer Electronic Show in Las Vegas on Jan. 5. The fitness-tracking wristband and other wearables included are impressive, but it's the new connected shoes that have really caught my attention. The Speedform Gemini 2 Record Equipped have a built-in chip that connects the shoe to the user's MapMyRun app to automatically record run stats.
Not only do these shoes represent the next generation of connected apparel, they are a great running product as well. Here's why this new shoe, available starting Feb. 29 for $150, could lead to outsized sales growth in 2016.
The shoes are a step up
Under Armour provided me with a pair of the shoes to test and report on. After six weeks with them on my feet, I'm very impressed with the overall quality, feel, and look. The heel cup is molded as one piece, so there's no removable sole liner like most shoes. Think of it like a bra cup, as that was the inspiration. That makes it feel almost like a sock, especially with the elastic-like material around the back of the ankle. I've run in a lot of different brands and styles, but these are definitely a favorite.
Even more fun has been how well the shoe's connected ability works. A chip in the shoe automatically tracks your exercise, including total distance and splits, and is said to be more accurate for distance and pace than GPS. The connected chip in these shoes is similar to what Nike initially designed with its Nike+ chip that could be integrated with some of its footwear.
However, this product is much more advanced in that it uses the runner's MapMyRun profile (height, weight, etc.) to work together with its algorithms to give the most accurate stats possible. It also begins recording runs automatically, can record up to five runs, and will sync whenever you have the app open near the shoes, making it easy to have untethered runs, as well.
Why this could really lead to surprising sales
During the fourth quarter of 2015, Under Armour's footwear sales jumped 95% year-over-year. With the release of this new shoe in late February, Under Armour is likely to continue posting impressive footwear sales in the first and second quarters of the new year. However, this segment only makes up about 17% of total revenue. What will really lead to surprising sales growth this quarter is how much the media attention around these new shoes drives overall apparel sales.
In first few weeks following the release of the new suite of connected Under Armour gear, these new shoes were featured in a variety of publications from Forbes to Runner's World. The articles have ranged from product reviews to analysis of Under Armour's competitive advantages in this space, but almost all of the coverage has been positive to the product and brand.
Apparel sales still make up about 70% of Under Armour revenue, much of which is geared toward general training and running. If the media attention from this launch can help to accelerate apparel sales, which already grew 22% year-over-year in the most recent quarter, that could be even more significant to revenue growth than if the shoes themselves sell out upon release.
Bradley Seth McNew owns shares of Nike and Under Armour. The Motley Fool owns shares of and recommends Nike and Under Armour. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.