Nike Kicked Adidas in November, but This Footwear Company Did Even Better

Apparel still dominates Under Armour's revenues, but footwear is growing in importance. Data: Under Armour third-quarter SEC filing.

Changing styles

Under Armour and Nike are benefiting from the growth of athletic wear as a form of leisure clothing, or what's being referred to as "athleisure" clothes. Activewear generally is on the rise, and the market watchers at NPD Group have recorded its growth all year long, noting this past summer that sales were up 7% to $34 billion for the 12-month period ending July 31.

That's come as denim sales fell 7%, according to NPD. VF Corp , which owns brands like Lee, Wrangler, and Seven for all Mankind, blamed the low, single-digit rate decline in its jeanswear business in the Americas partly on continued challenges in women's denim.

It admitted athletic wear is on the rise and though women haven't given up on denim, they're wearing it less in favor of athleisure outfits.

Nike does have one competitive advantage over Under Armour that likely will keep the scales from tilting too far away from its favor, beyond just its size. Like Under Armour, its gear is sold in sporting goods stores like Dick's Sporting Goods and Sports Authority, but its apparel is also sold through department stores and accounts for a quarter of such revenues.

That's a channel Under Armour hasn't exploited even as it generated more than one-fifth of its sales from Dick's and Sports Authority in 2013.

But it does look like an avenue it can always tap into in the future where sales would seemingly come at the expense of Nike.

Whether its footwear or apparel, it's clear Adidas is a fading competitive threat. Last month its apparel sales fell 17% to $50 million and it actually ranked in fourth place behind The North Face, which is owned by VF Corp.

Nike, of course, still led the category, with November apparel sales hitting $325 million, or an 11% gain from last year. But Under Armour continues to narrow the gap, recording an 18% jump in apparel sales to reach $257 million.

Under Armour ready to kick it to Nike

The surprise may be that it's in footwear where Under Armour can gain, well, equal footing with Nike.

Sales have been on a tear, rising at double-digit rates for years, but in more recent periods showing particular strength. They were up 50% in the third quarter, following a 34% gain in the second and a 41% jump in the first.

Footwear sales growth is running ahead of the increases seen in Under Armour's apparel and accessories division. Data: Under Armour quarterly SEC filings.

Analysts continue to be bullish about Under Armour's future. Consensus estimates call for a 24% increase in fourth-quarter revenues to almost $850 million while earnings are expected to rise 30% from the year-ago quarter. They see 2015 earnings slowing just slightly to a 26% increase with long-range estimates of 24% growth.

That's much better than Nike's expected 15% increase in earnings next year and 12.5% rise long term.

A lot of the strength in Under Armour's future is likely predicated on apparel sales, but as the gear maker is proving, footwear sales could be what kicks Nike off its perch.

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The article Nike Kicked Adidas in November, but This Footwear Company Did Even Better originally appeared on Fool.com.

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