The next time you visit the mall, pay specific attention to the brands kids and teens are wearing. You might notice that many of them are wearing Under Armour Inc (NYSE:UA). If the kids are wearing it now, Under Armour Inc (NYSE:UA) has an opportunity to keep those consumers loyal for the remainder of their lives. Under Armour has a long way to go to catch NIKE, Inc. (NYSE:NKE), but NIKE, Inc. (NYSE:NKE) has the target on its back.
Strong growth
I recently did a study on the 30 Dow components, and 40% of those companies saw declining revenue in their latest fiscal year. The Dow has moved higher for various reasons, but that’s a story for another time. The point here is that while many Dow-component companies are suffering revenue declines, Under Armour Inc (NYSE:UA) is delivering consistent top-line gains. That’s impressive.
Under Armour’s net revenue has shown gains north of 20% for 13 consecutive quarters. In the most recent quarter (Q2), net revenue increased 23% to $455 million. For a better idea of the big picture, Under Armour’s 2012 revenue came in at $1.8 billion, versus $725 million in 2008.
The Under Armour Inc (NYSE:UA) brand is constantly growing, and demand remains high. Under Armour expects FY 2013 revenue to grow between 22% and 23%, coming in at $2.23-$2.25 billion.
Additionally, Under Armour Inc (NYSE:UA) isn’t sitting back and relying on momentum alone. It’s also a consistent innovator, which keeps the pipeline busy and full of potential.
Recent innovations
Part of Under Armour’s growth strategy is international expansion, but innovation is just as important because it heightens demand in established markets. A few of the company’s most recent innovations:
UA COLDGEAR: Apparel that allows athletes to stay warm for longer periods of time.
UA HEATGEAR: Apparel that regulates body temperature and enhances workouts.
UA Speedform: Revolutionary running shoe with seamless heel cup.
UA Spine Venom: Running shoe with excess foam removed, which rids extra weight without sacrificing comfort.
(Sources: 10-Q/UnderArmour.com)
Speaking of Nike
Under Armour Inc (NYSE:UA) has a market cap of $7.73 billion, making it a much smaller company than NIKE, Inc. (NYSE:NKE), with a market cap of $56.52 billion. While Under Armour has stolen some market share over the years, NIKE, Inc. (NYSE:NKE) always fights back strongly Like Under Armour, Nike constantly innovates.
Nike’s flyknit running shoe Free Hyperfeel gets rid of extra padding, allowing the runner’s foot to feel the ground. Nike Pro Turbospeed is the lightest and fastest track uniform Nike has ever designed. It’s clearly evident that Under Armour and NIKE, Inc. (NYSE:NKE) are battling each other with similar products. Under Armour has more growth potential domestically, while Nike has more growth potential internationally, thanks to its immense marketing power.
A riskier alternative
Many investors who venture into the apparel space often find themselves also considering Lululemon Athletica inc. (NASDAQ:LULU) as an investment option. Here’s why:
