Under Armour’s growth initiatives in 2015
2015 has arguably been one of the most eventful years for Under Armour (UA). 3Q15 marked the company’s first $1 billion quarter. The company also announced the purchase of fitness app companies Endomondo and MyFitnessPal in early 2015.
UA’s MyFitnessPal acquisition for $475 million was primarily debt-financed. Under Armour’s borrowings increased by $650 million in the first nine months of 2015, with debt levels rising to the highest-ever in the company’s history.
That said, while the company’s relative debt levels and coverage ratios are higher than those of peers VF Corporation (VFC), Lululemon Athletica (LULU), and Columbia Sportswear (COLM), they’re still healthy, and the company has undertaken debt to finance growth opportunities.
Retail and wholesale expansion
Under Armour also embarked on one of the most aggressive channel-agnostic expansion plans, both in the United States and abroad. UA had projected the addition of 100 Brand House stores globally in 2015, though most would come via partnerships.
Under Armour’s investments in its athletic roster have also been hugely successful in 2015. The on-field triumphs of its celebrity endorsements, including NFL MVP Tom Brady, NBA MVP Stephen Curry, PGA Tour Player of the Year Jordan Spieth, and Misty Copeland, among others, have contributed to the brand’s equity.
Nike (NKE) has also been active in terms of endorsements. Last year, the company won the bid for NBA on-court apparel rights starting from the 2017–2018 season, among other endorsements. Nike replaces current sponsor Adidas (ADDYY), which announced that it wouldn’t be bidding to extend its sponsorship[1. Source: Portland Business Journal]
Stock market performance
The success of UA’s athlete roster has been partially responsible for the stock touching several record highs in 2015. UA touched an all-time high of $104.10 on September 17, 2015. UA’s stock price was up by 18.7% in 2015, finishing the year at $80.61. However, the stock price dropped to $67.11 on January 19, 2016.
Under Armour and its peers VF Corporation (VFC), Nike, Hanesbrands (HBI), Lululemon Athletica, and Skechers (SKX) make up 1.3% of the portfolio holdings of the iShares Russell 1000 Growth ETF (IWF), a growth-oriented ETF.
UA is also part of the First Trust Consumer Discretionary AlphaDEX ETF (FXD), with 0.2% of the ETF’s weight. Textiles, apparel, and luxury goods companies make up 6.2% of FXD’s holdings.