The Golden State Warriors play the Oklahoma Thunder today in game five of their Western Conference playoff series. The Warriors, who set an NBA record for wins this year, face elimination on their home court, down three games to one in the best of seven series.
The Cleveland Cavaliers play the Toronto Raptors tomorrow in Cleveland. Their series is knotted at two games apiece.
If you're an Under Armour (UA) - Get Report investor, root for the Warriors to win this evening and defend their championship. The Warriors' star Stephen Curry endorses the company's shoes and gear. If you're a Nike investor, cheer for the Cavaliers and Lebron James or Oklahoma's Kevin Durant to win. James and Durant are Nike-sponsored players.
When a star player wins a championship, the company whose merchandise they endorse usually sells more shoes and clothing, at least those lines bearing the star's name. That can make a difference in quarterly earnings, and beyond, and potentially benefit share price.
That isn't to say the playoffs will create slam-dunk investments. But they can foreshadow positive trends.
Last week, shoe retailer Foot Locker (FL) - Get Report missed analyst's estimates but reported a 2.9% increase in same-store sales while maintaining gross margins. The chain's performance offered indicated that sales of athletic shoes are healthy. Curry shoes were particularly strong sellers. Lakers' star Kobe Bryant's line of shoes and Air Jordans named for the retired Chicago Bulls' star Michael Jordan also did well.
But in its earnings conference call, Foot Locker said that the Kevin Durant and LeBron James lines had underperformed.
The strong Curry sales underscored the Warriors' status as the NBA's best, most marketable team. Golden State set a regular season record of 73 wins, one better than the record of Jordan's 1995-96 Bulls team. Moreover, Golden State played a pleasing, up-tempo style and in Curry, the team had a player who was unimposing physically and succeeded as much through smarts as athleticism. Fans like smart players.
Bryant's announcement near the top of the season may have boosted sales of his shoes. Jordan remains as much a cultural as a sports icon, a player who simultaneously introduced a new athleticism to basketball and influenced sports apparel and shoe styles. Baggy shorts and Air Jordans remain popular 13 years after his retirement.
That said, the playoffs could impact sales, particularly if the Warriors lose.
Children and teens with an interest in sports want to emulate the stars, not only in how they play but what they wear. This is why endorsement deals for major sports companies can be so valuable. They become even more lucrative when a brand associates with a winner.
Curry's shoes should continue to sell well, regardless of whether his team wins. He has captured the public's interest in a way that is rare. That should help Under Armour stock. But look for improved Nike sneaker sales if Durant or James become champions.
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This article is commentary by an independent contributor. At the time of publication, the author held stock in Under Armour.