Under Armour's Turn on the Runway Could Be a Mistep

By Markets Fool.com

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An image from the Under Armour Sportswear collection. Image source: Under Armour.

Under Armour(NYSE: UA) is about to make a splash in the fashion world.

The clothing company best known for its moisture-wicking compression T-shirts and other athletic performance gear is debuting its first collection at New York Fashion Week on Thursday.

It's a pivot for the sports apparel company as it searches for new growth opportunities to keep its streak of 25 straight quarters of 20% revenue growth going. The new line, called Under Armour Sportswear, or UAS, tapped Ben Pruessand Tim Coppens, bothformerly ofAdidas,to lead the collection. Among the items featured are $200 wool pants and $1,500 trench coats.

The designers were careful to explain that the new collection is not athleisure, and seems to lack any of the sporty components associated with Under Armour or athleisure brands likeLululemon. The clothes are targeted at young professionals whom the designers describe as "ambitious millennials" who may be growing out of the kind of streetwear that rivalsNike(NYSE: NKE)and Adidas are better known for.

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Following the leaders

Under Armour isn't the first sports brand to hit the high-fashion runway. Adidas, Nike, andPumahave all debuted their own collections in the past, teaming up with designers like Alexander Wang and Pedro Lourenco, but Under Armour's new line seems to extend further away from the industry's core competency.

Nike has used fashion as a way to break into the women's market, recognizing that women's clothes need to be more style-conscious and carry a wider variation in color. Adidas, on the other hand, has partnered with designers to expand the creative side of the brand and keep customers excited about it. Its collaborations with rappers Pharrell and Kanye West also show that its focus tends to be on streetwear style, and not the professional consumer that Under Armour is targeting.

Nike and Adidas also have the luxury of being old enough to draw on classical models. Some of their earlier shoes have become timeless icons, like the Adidas Superstar and the Nike Air Force One. This is as much a fortunate accident and a result of savvy marketing as anything else, but Under Armour has no such legacy products to build a streetwear or sportswear brand around.

The risk of diluting the brand

The new Under Armour Sportswear line won't be available most places you'll find Under Armour. Instead, it will be sold at Barney's and Mr. Porter, the retailer's partner website, as well as a handful of Under Armour's flagship stores and a separately branded website.

The company describes UAS asa "collection that goes beyond the comforts of casual active wear andthe trusted functionality of innovative athletic wear,"but with prices up to $1,500 the company is clearly targeting a different kind of customer than the weekend warriors who might pick up some Under Armour gear at their local Sports Authority.

The new line also seems to be a divergence from Under Armour's mission statement: "To make all athletes better through passion, design and the relentless pursuit of innovation."

More than anything, the brand seems to be defined as developing technology and innovation for athletic performance gear. Under Armour has made acquisitions -- including several in the connected fitness area, such as MapMyFitness -- to give it consumer data and build a customer ecosystem. Each year it holds an event it calls the Future Show, where it shows off new products and innovations, and hosts an Innovation Challenge where entrepreneurs bring prototypes they hope to sell to Under Armour.

The UAS line appears to be a step away from all that, and risks muddling the technical athletic gear brand the company has worked so hard to develop.

This is a delicate line for any brand, especially in fashion. Nike, for instance, has always avoided entering casual dress clothes under its own brand. It's careful to communicate that it's not a fashion brand,and on the company's campus, fashion is often referred to as the F-word. For 24 years, Nike owned dress shoe-maker Cole Haan, but sold it in 2012 to focus more on its flagship brand.

Attaching the Under Armour name to the new apparel line comes with risks. The high-end pricing does not fit with Under Armour's mid-priced athletic gear, and even if the collection is well received, it could harm the core Under Armour brand by diluting it.

Despite their forays into fashion, Nike and Adidas have remained athletic brands first and foremost. Expect the same from Under Armour.

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Jeremy Bowman owns shares of Nike and Under Armour (A Shares). The Motley Fool owns shares of and recommends Lululemon Athletica, Nike, and Under Armour (A Shares). 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.