Phenomenal expansion of UAA’s footwear business
Under Armour (UAA) launched its footwear business in 2006. In a matter of ten years, the company has created a mark for itself and challenged Nike (NKE), the dominant market leader. UAA’s footwear business has had remarkable progress, growing by five times in the past five years.
Footwear now accounts for more than 20.0% of Under Armour’s total sales. Footwear sales rose 54.0% YoY (year-over-year) to $785.0 million in the first nine months of fiscal 2016. Growth was led by strong momentum in the running and basketball categories.
In comparison, UAA’s apparel business, which accounts for two-thirds of the company’s total revenue, rose ~19.0% in the first nine months of fiscal 2016.
The company plans to further expand its footwear line. It has projected $1.7 billion in annual footwear sales by 2018, which is 2.5 times what it reported in fiscal 2015.
In its 3Q16 earnings call, CEO (chief executive officer) Kevin Plank said, “We’ll continue to invest meaningfully in our footwear business.” He added, “We believe we are at a moment in time where we can gain share in footwear and we are prepared to make investments that will drive long-term profitable growth.”
Curry series and more
UAA’s Curry series, named after Stephen Curry, an NBA (National Basketball Association) MVP (most valuable player), has been one of the company’s most successful footwear lines. UAA has already launched its Curry 1, 2, and 3 series. Response to the Curry 3 series was lukewarm, but the 1 and 2 series were huge successes.
Under Armour’s other recent footwear successes in 2016 were the new iteration of its SpeedForm Gemini running shoe and the Architect. According to Plank, the Under Armour Architect line sold out in 19 minutes after its online launch.
If you’re interested in adding exposure to UAA, you can consider the iShares US Consumer Goods (IYK), which invests 0.26% of its portfolio in the company.
In the next part of this series, let’s take a look at Under Armour’s geographic presence.