Why Under Armour Will Continue to Outmuscle the Competition
Once again, Under Armour (NYS: UA) has shown itself to be a force to be reckoned with in the sports apparel industry. Although its main competitor is considered to be Nike (NYS: NKE) , Under Armour puts less emphasis on footwear than Nike and more on its line of apparel -- which makes sense for a company that started entrepreneurial life as a maker of moisture-wicking undershirts for sports teams.
The company is a real go-getter, CEO Kevin Plank sure knows how to market the brand. Unlike competitor Columbia Sportswear (NYS: COLM) , which sells its wares through its own stores, Under Armour markets its products primarily through partnerships with Dick's Sporting Goods (NYS: DKS) and The Sports Authority. Also, unlike Columbia, the company has seen its growth skyrocket this year, pulling down a 41% increase in stock value -- all while Columbia, which has been suffering from a lack of investor confidence due to stagnant sales, has lost more than 20% of value in the past year.
How it's done
Under Armour always has something new going on, which is imperative for a business to grow. Additionally, management has a keen eye for what is becoming popular and profitable and jumping on it. The company moved into the cotton-apparel sector last year in a grab for part of the $8.3 billion cotton activewear market. Also, possibly noting the success of yoga-wear leader lululemonathletica(NYSE: LULU), the company has been offering a line of women's sportswear since 2004 (although its market share is nowhere close to Lululemon's, and the sector makes up only about a quarter of the company's total sales). The company does have a line of "green" clothing for both men and women, however, which is made from recycled materials and should appeal to the active and ecology-conscious consumer.
The apparel maker is also expanding its retail presence. It is planning a store-within-a-store format with partners Dick's Sporting Goods, Nike, and Foot Locker (NYS: FL) , which has experienced exponential growth over the past year as it boosted its apparel sales and profits. In fact, all three of these stores have grown significantly in the past year, and Under Armour's decision to expand its presence there over the next year or so marks yet another forward-looking decision.
I see every reason for this company to continue on its upward swing. In addition to the expansion plans mentioned earlier, the company has announced plans to increase the number of outlet stores from 72 to 120. Although its women's line hasn't quite taken off yet, I'll bet that if Under Armour expanded the green-wear category into more yoga-style clothing, it might snag some of Lululemon's crowd. With warm weather approaching and a brightening economic picture, look for this company to surge even higher soon.
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Fool contributorAmanda Alixowns no shares in the companies mentioned above.
At the time this
article was published The Motley Fool owns shares of lululemon athletica, Under Armour, and Dick's Sporting Goods. Motley Fool newsletter services have recommended buying shares of Nike, lululemon athletica, and Under Armour. Motley Fool newsletter services have recommended creating a diagonal call position in Nike. The Motley Fool has a disclosure policy.
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