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Under Armour’s Upbeat Outlook and Stock Price Performance

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Record stock prices

Under Armour’s (UA) stock price hit several record highs this year. The stock has provided total returns of 54.9% over the past year. Skechers (SKX), which has returned almost 152.7%, has been the top performer over the past year.[1. Returns updated as of October 16, 2015]

In comparison, competitors Nike (NKE), Lululemon Athletica (LULU), and Columbia Sportswear (COLM) have returned 51.6%, 34.5%, and 66.3%, respectively. The overall consumer discretionary sector, represented by the S&P 500 Consumer Discretionary Sector Index (XLY) (FXD) and the S&P 500 Index (SPY) (VOO) (IVV), have returned 25.8% and 11.4%, respectively.

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Under Armour and its peers have outpaced returns on the consumer discretionary sector and the benchmark S&P 500 Index. These firms have benefited from higher-than-average growth rates, as the consumer trend towards “athleisurewear” has taken hold at the expense of more traditional apparel retailers. UA and Skechers are among the fastest-growing stocks in the peer group considered.

UA’s stock is up 47.4% year-to-date, to $100.08 on October 16. It also touched several all-time highs in 2015, the last one on September 17, following the company’s 2015 Investor Day on September 16. The stock spiked 5.5% over two days to close at $104.10 on September 17 on the company’s releasing an upbeat future outlook.

Brad Dickerson’s exit

However, on October 13, UA announced that its chief financial officer and chief operating officer, Brad Dickerson, would be leaving in February 2016 to pursue another professional opportunity with a firm in another industry. The stock slipped almost 2% to $101.30 on the news on October 13. It fell a further 3.9% on October 14.

As we explained earlier in the series, UA is scaling up its operations and expanding its reach globally. It’s also looking to step into new product categories as part of its medium-term plan announced at its 2015 Investor Day in September. Brad Dickerson holds two top-level positions at UA: CFO and COO. The prospect of his exit increased the market’s perception of execution risk for UA’s future plans.

For more earnings updates and analysis, please visit our Consumer Discretionary and Retail page.

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