Expanding the line of women’s clothing has been a priority of Under Armour’s. The company has long had products in Dicks Sporting Goods Inc (NYSE:DKS) and Sports Authority, two retailers where men typically shop. Under Armour now has women’s clothes available at stores like Macy’s, Inc. (NYSE:M) and Nordstrom, Inc. (NYSE:JWN). A quick visit to Macy’s website reveals 257 Under Armour items, of which 60 are in the women’s category.
Back in April, Under Armour announced a partnership with Steele Fitness. This regional fitness chain will open an Under Amour store in all six of its fitness center locations. The stores will offer workout apparel, yoga pants, jackets, and sneakers.
Under Armour Inc (NYSE:UA) is hoping it can take away some market share from yoga pants leader Lululemon. In the most recent fiscal year, Lululemon saw revenue increase 37% to $1.4 billion. Encouraging for Under Armour might be the fact that same store sales increased 16% at Lululemon locations. The company, which has 218 stores, opened 37 new locations in fiscal 2012. Under Armour’s growth in women’s products and new stores can eat away at the market share dominance Lululemon enjoys.
In the first quarter, Lululemon Athletica inc. (NASDAQ:LULU) posted a revenue increase of 21%. Same store sales of 7% and the addition of 8 stores in the quarter powered shares higher. The strength of the same store sales for both 2012 and the first quarter of 2013 sets up well for Under Armour. There is plenty of room for multiple players in the yoga apparel market. With Under Armour’s strong relationships with retailers and its entry into a new store layout, I expect Under Armour to begin stealing market share away from Lululemon.
Lululemon posts revenue of over $5 million per store, giving the company a high sales per store in apparel retail. Under Armour, with its diverse product line, can have success with its yoga apparel. By not branching off into just yoga stores, but rather partnering with a gym, Under Armour takes away some of the risk. The growth in women’s clothing will come from the larger store fronts that cater to both men and women.
Earnings
In the first quarter, Under Armour saw revenue rise 23% to $472 million. Apparel sales ($346 million) made up the majority of this number. The company said it “continue to see traction with our expanded women’s lines in studio and ArmourBra.” Apparel sales made up 80.0% of fiscal 2012 sales. The increase in women’s apparel might keep that number high, but it could also be lowered by strong sales of women’s shoes or the new Armour39.
Conclusion
Analysts on Yahoo! Finance expect Under Armour Inc (NYSE:UA)’s revenue to increase 22.3% in fiscal 2013. The company is taking on rivals in key categories and working on a new store base, which will help it expand its locations and product offerings in international markets. Both of these new product initiatives came after analysts set their full year estimates. I believe Under Armour could increase revenue closer to the 25-30% range with strong store sales. An increase in key demographics of international markets and women will also power shares higher. Take the ride with Under Armour and enjoy the growth this apparel maker still has ahead.
Chris Katje has no position in any stocks mentioned. The Motley Fool recommends Lululemon Athletica, Nike, and Under Armour. The Motley Fool owns shares of Nike and Under Armour.
The article Under Armour Takes on Two Companies With Recent Announcements originally appeared on Fool.com.
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