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Under Armour’s Performance Relative to the Sportswear Industry

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How the sports apparel industry performed in 1H15

The US sports apparel industry saw positive dollar-value growth in the first half of 2015.[1. Source: First Data, based on non-cash PoS data] Gains came about partly on account of higher ticket size and partly due to a greater number of transactions.

For much of 2013 and 2014, dollar-value growth in sports apparel retail has outpaced growth in the overall retail sector. The trend toward “athleisurewear” and the success of yoga-wear firms such as Lululemon Athletica (LULU) have attracted new entrants, among them:

  • Columbia Sportswear (COLM), with its purchase of prAna in 2014
  • Lou & Grey, launched by Ann (ANN)
  • PINK, an activewear line launched by L Brands (LB)

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June trends concerning

Meanwhile, dollar-value sales by sports apparel retailers fell by 0.4% in June. The number of transactions declined by 2.3%. Transaction growth for women’s accessories and at specialty shops, men’s and women’s clothing stores, department stores, and miscellaneous merchandise stores was negative. This could prove a headwind for certain categories when the retail sales (XRT) report for June is released on July 14. Preliminary spending data released by Gallup’s consumer spending measure also indicate softness in June’s discretionary spending (XLY) (FXD) numbers.

The SPDR S&P Retail ETF (XRT) has almost 24% of its holdings invested in apparel retailers, including Ann (ANN).

Market share stats in 1Q

In dollar terms, sales volumes of activewear rose by 9% in 1Q15. Nike (NKE) was the market leader for activewear overall in 1Q15—men’s and women’s—with a 13% share of the market. Under Armour (UA), which overtook Adidas (ADDYY) last year as the number two US sportswear company, cemented its position. UA’s market share came in at 6%, and ADDYY’s share came in at 3%. Hanes (HBI) took 3% of the market in 1Q15.[1. Matt Powell, The NPD Group]

Under Armour’s performance

Under Armour clocked total apparel sales of $555 million in 1Q15, up ~21% year-over-year. UA derived over 90% of its total revenue from North America and over 86% from the US. Under Armour’s sales performance indicates that the company is likely growing faster than the overall sports apparel industry.

Sports apparel sales in the US are also likely rising faster than overall apparel sales. Overall US retail sales for clothing and footwear rose by 3% year-over-year to $55.1 billion in 1Q15. According to the United States Census Bureau, sales at sporting goods, hobby, books, and music stores rose by 5.2% year-over-year to $19.3 billion. Sales comparisons in the first quarter of 2015 benefited slightly from an earlier Easter and poor weather in 1Q14.

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