QUOTE AND NEWS
SeekingAlpha  Aug 15  Comment 
By Karoline Porcello: Under Armour, Inc. (NYSE: UA) landed a place on Fortune's Fastest Growing Companies list for 2014. It's no surprise - the performance apparel company has tripled its revenues over the past five years and continues to aim big...
Market Intelligence Center  Aug 15  Comment 
Under Armour Inc (UA) is a good candidate for a covered call at the $62.50 level. The Jan. '15 call at that price should fetch a credit of about $8.90, which means the entire position has a net debit of about $59.90. This trade has 11.70% downside...
Forbes  Aug 13  Comment 
The S&P 500 has slipped during Q2 earnings season, but some stocks have still been standouts.
Benzinga  Aug 12  Comment 
News that NBA MVP Kevin Durant is close to inking a $325 million endorsement deal with Under Armour (NYSE: UA) has had tongues wagging on Wall Street. Securities lawyers debated whether the company would have to disclose the deal to shareholders...
Market Intelligence Center  Aug 12  Comment 
The patented option-trade picking algorithms that power MarketIntelligenceCenter.com's Artificial Intelligence Center are highlighting two trades on Under Armour Inc (UA) today after it closed at $68.90 on Monday. For more conservative investors,...
CNNMoney.com  Aug 11  Comment 
These top CEOs of S&P 500 companies made shareholders very wealthy over the past three years.
Motley Fool  Aug 10  Comment 
The youth are our future -- and they may also be the future of Under Armour and Dick's Sporting Goods.
SeekingAlpha  Aug 8  Comment 
By Options Calling: Under Armour, Inc. (NYSE:UA) the Baltimore-based designer and marketer of sportswear and casual apparel made a gap up opening on July 24, 2014 by 8% to open at $65.51 in response to the Company's strong performance during...
Benzinga  Aug 6  Comment 
CRT Capital initiated coverage on Under Armour (NYSE: UA), and while the company does possess great investment characteristics, CRT mentioned that the relatively high valuation when compared to peers limits upside, which was why it gave Under...
TheStreet.com  Aug 6  Comment 
NEW YORK (TheStreet) -- Under Armour shares had coverage initiated with a "fairly valued" rating and a price target of $70 by analysts at CRT Capital on Wednesday.The price target represents a minimal upside over the sports apparel company's...




RELATED WIKI ARTICLES
 

Under Armour is a sportswear company that has built a leading brand name in the emerging market for hi-tech athletic gear [1]. The company uses patented synthetic fabrics in its apparel, marketing its products as perfomance-enhancing alternatives to traditional cotton or mesh gear as UA products are designed to wisk away moisture, regulate body temperature, and improve comfort. Under Armour's brand has captured share in the hard-to-reach demographic of 18-35 sports-oriented males, and established itself in the youth market as well. UA has been traded as a public company from November 2005. [2]

The company's traditional focus has been on compression (tight fitting) performance attire, but the company has also begun to offer a more comprehensive array of products-- “LooseGear” in an effort to appeal to customers looking for a more conventional relaxed-fitting apparel that still provides exceptional performance [3]. As Under Armour has expanded its retail offerings, the company has also seen rapid financial growth. [4][5]

Company Overview

Increases in UA's revenue over the last five years is due more to an increase in popularity of hi-tech gear rather than Under Armour capturing market share from competitors. Yet the increasing gap between revenue and net income is due to Under Armour's attempts to break into new markets as well as its reliance on third party distributors. Under Armour is spending more on merchandising to break new markets as well as dealing with distributors. cody bennett

Business Segments

Under Armour's apparel products are separated into three different categories, ColdGear, HeatGear, AllSeasonGear. [6] In 2006 Under Armour added a fourth segment, footwear, entering this market with their performance cleats for football, baseball, and softball. The company quickly signed a contract with the NFL the same year to be their official footwear supplier.[7] Under Armour also produces a number of accessories such as gloves for football, baseball, and golf, as well as socks, bags, and eye wear. [8]

HEATGEAR: Designed for hotter temperatures and humid environments, HEATGEAR is the original Under Armour product. Its microfiber design helps the body breathe and gets rid of moisture quickly, allowing the athlete to remain light and dry. [9]

COLDGEAR: COLDGEAR is the most expensive product line of Under Armour and the most popular. Its design is similar to the HEATGEAR, with microfiber material getting rid of moisture. However it is also not designed to trap heat and keep the body warm. Its popularity helped to Under Armour's profits increase dramatically in late 2007 and earl 2008.

ALLSEASONGEAR: This product line is designed differently from other Under Armour products as it does not use microfiber. Rather it uses technical fabrics that are good for both hot and cold temperatures. Examples of ALLSEASONGEAR include tights, jackets, and long sleeve shirts.[10]

Recovery Gear: Under Armour's product offerings contain the Recharge compression suit, which is designed to relieve aches and pains after workouts, shortening soreness time and re-energizing the body. The company says the suit's high price tag ($200) is offset by the product's uniqueness and niche high-income market. [11]

Trends and Forces

The regions of the world where Under Armour products are manufactured are very unstable

Roughly half of Under Armour Products are produced in Asia, a quarter in Central America, and a quarter in Mexico.[12] Central America and Mexico are unstable regions of the world and have witnessed much political violence in recent history. Such violence could directly effect Under Armour as factories shut down or are destroyed, shipments are delayed or confiscated, or employees are attacked or leave their posts. As a result Under Armour would be unable to distribute in the United States.

Diversification into Footwear Market Takes Aim at Powerhouse Nike

Under Armour's attempts to penetrate the shoe market have been fairly successful with their performance cleats. The company is the official footwear sponsor of the NFL.[13] The move into the footwear market marks another step in competition with Nike, with future plans to expand into the basketball, tennis, and soccer footwear markets.[14] [15]

Under Armour relies too heavily on a limited number of distributors

Roughly one third of Under Armour's sales were to Dick's Sporting Goods (DKS) and Sports Authority.[16] If either of these companies were to suffer, Under Armour's sales would be affected. Also the company does not enter into long term sales contracts with any of its key customers, relying on a good faith policy.[17] Due to the lack of any contracts, these customers can take away business from Under Armour whenever they feel the need to. In addition, the vast majority of the company's wholesale distribution is through large format national and regional retail chains. [16]

UA is highly dependent on US for sales

Over 80% of Underarmour's net sales come from the United States, and less than 10% of net sales came from outside the US and Canada. [13] In contrast to Nike and Adidas, which have large presences in international and emerging markets, UA at present is dependent on the US for sales growth. While it is a small company and has the potential for expansion, short term declines in US consumer demand have the potential to negatively affect the company's bottom line.

Competition

Under Armour's pen main competition comes from large and well established apparel and footwear companies, such as Nike (NKE) and Adidas AG (ADDYY). These companies have international appeal and resources to match. Thankfully, Under Armour competes with them in a market that they specialize in. Therefore the company has been able to be both competitive and very successful despite the fact that their competitors have far more resources. Also, Under Armour competes with other sportswear focused companies, such as Columbia Sportswear Company. These smaller companies, while more of a match for Under Armour in terms of resource, they too appeal to a larger base than Under Armour and are competing with the company in only one market. In their primary market, athletic apparel, Under Armour can claim 74% of the market share, with Adidas and Nike struggle to catch up.[18] In the terms of the overall athletic market, Under Armour claims 31% of the market share, Nike 36%, and Adidas and other athletic companies claiming the remainder.[19]

References

  1. UA 2007 10K, Item 1, pg.1
  2. UA Business Website
  3. UA 2007 10K, Item 1, pg.1
  4. Google Finance UA
  5. Wikinvest: UnderArmour Reports Q4 Results
  6. UA 2007 10K, Item 1, pg.1
  7. UA 2007 10K, Item 1, pg.1
  8. UA 2007 10K, Item 1, pg.2
  9. UA 2007 10K, Item 1, pg. 2
  10. UA 2007 10K, Item 1, pg.2
  11. "Under Armour's New Recovery Suit"
  12. UA 2007 10K, Item 1, pg.16
  13. 13.0 13.1 UA 2008 Annual Report, Item 16, pg.73
  14. MSN Money, "Sector Snap: Athletic Apparel"
  15. 16.0 16.1 UA 2008 Annual Report, Item 1, page 5
  16. UA 2007 10k, Item 1, pg. 13
  17. Kevin Kelly, "Under Armour: Overvalued and Vulnerable" 16 Jul 2007
  18. Douglas McIntyre, "Cramer backs Nike and Under Armour" 17 Nov 2006
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