Under Armour - Growth Continues To Sizzle On All Fronts

| About: Under Armour, (UA)

Summary

The company is marketing to women with new products (style) in new places (Kohl's).

It benefits from domestic growth in retail, along with expanded East and West Coast marketing exposure.

International growth is being fueled by Curry.

Under Armour Inc. (NYSE:UA)(NYSE:UA.C) just reported another amazing quarter with growth across all fronts of its business. While short term concerns like the fallout of the Sports Authority bankruptcy, and tighter margins across its product mix, might be a short term drag on the stock (article), the future growth prospects have never looked better as second quarter revenue growth was an amazing 28% with over $1 billion in sales for the quarter. Future growth should benefit domestically from increased sales to women, basketball shoes, new presences on the East and West Coast, and internationally as Under Armour and Curry soon will soon engage on their second tour of China.

Under Armour announced a brand new partnership with Kohl's (NYSE:KSS) starting in early 2017 in its latest earnings call on July 26, 2016. This should give the company access to at least 600 new outlets to start the year and will feature a pretty standard apparel and shoe product mix which should keep margins in line. Kohl's has a particularly large and loyal customer base, especially among women, which is a segment Under Armour really wants to focus on going forward. Under Armour's women's business already is projected to be a $1 billion business this year and the movement into Kohls, along with the launch of the company's Under Armour Sportswear (UAS) line later this September, should fuel even more growth in this business.

The upcoming UAS line will be young, fresh, and modern sportswear geared toward fit and style for off-the-field and built for everyday life. The newly hired skateboarder and premium fashion designer Tim Coppens (article) will be the Executive Creative Director of UAS. The UAS line will be available in limited retail establishments, but will be geared mainly for the mobile native consumer as a direct to consumer (DTC) product.

The Curry Phenomenon continues as basketball superstar Stephen Curry's line of basketball shoes continues to dazzle with second quarter footwear revenues growing an amazing 58%. Sales of the Curry 2 have been bolstered by Curry's second MVP this season, being named the first unanimous MVP in NBA history, and another deep post-season run by the Golden State Warriors. Further growth should come with the release of the Curry 3 later this fall along with Under Armour and Stephen teaming up for a second promotional tour of China late this summer.

On the East coast, Under Armour will take over the former FAO Schwarz space on Fifth Avenue in New York City. This will be a 53,000 square foot presence built to be "the most breath taking and exciting consumer experience ever conceived at retail" according to CEO Kevin Plank. On the West coast Under Armour recently signed exclusive deals with the UCLA and Cal Berkeley athletic programs along with opening up a Connected Fitness office in San Francisco.

Under Armour and Stephen Curry's tour of China last year was so successful that they plan on doing it again this year as international sales were up in the second quarter by an incredible 68%. Driving a lot of this growth is the Curry 2 shoe, which is the top selling item in China so far this year. With the amazing growth in China so far, it is not surprising to see companies in China trying to take advantage with clever marketing gimmicks like Chinese sportswear company Uncle Martian's name and logo (article).

Conclusion:

While short term issues and concerns such as margins and the Sports Authority bankruptcy might put near term pressure on the stock, growth continues to amaze and shows no signs of slowing down. A new focus on modern, stylish, and energized off the field apparel and new retail presences including Kohls should help speed up growth in the women's business while the company builds its marketing presence with new ultra-premium retail spaces and an ever growing athletic presence among schools and athletes around the world. Add in the unstoppable force that is Stephen Curry to drive sales domestically and internationally and growth should continue to sizzle as the company now has 25 consecutive quarters of 20%+ revenue growth.

Disclosure: I am/we are long UA, UA.C.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.