Under Armour Inc

Most of Nike’s (NKE) incremental revenue was recorded in its North America market, Nike’s largest geographical segment.

Under Armour’s share of the apparel market rose from 14% to 16%, year-over-year, in the first nine months of 2014.

On June 11, Lululemon Athletica (LULU) filed a shelf prospectus with the US Securities and Exchange Commission (or SEC).

Under Armour was the S&P 500’s top gainer on April 3. After declining for three consecutive trading weeks, Under Armour regained stability last week.

On May 4, 2016, the S&P Consumer Staples slightly outperformed the S&P 500 and the S&P Consumer Discretionary as a whole.

In fiscal 1Q17. Lululemon’s (LULU) e-commerce sales rose by 16.7% to $97.6 million in the quarter, representing 19.7% of its revenue.

Under Armour’s cash and cash equivalents fell 6.7%, and its inventories rose 38.8% between 4Q15–2Q16.

Lululemon Athletica (LULU) reported sales revenue of $453 million in 2Q16, up 15.9% year-over-year. Excluding the impact of adverse foreign currency movements, sales would have increased by 21%.

One day after Kate Spade’s upgrade, Under Armour and Gap also came under scrutiny. On September 13, Nomura initiated coverage of UA with a “neutral” rating.

Nike’s cash and cash equivalents and inventories rose by 0.96% and 8.1%, respectively, in fiscal 3Q16 compared to fiscal 3Q15.

Markets expect the strong growth trend to continue, and value Under Armour stock higher than the overall market and comparable firms.

Columbia Sportswear (COLM) has a market cap of $4.1 billion. COLM fell by 0.31% to close at $58.34 per share as of February 22, 2016.

On June 16, 2016, the S&P 500 Consumer Staples Index slightly outperformed the S&P 500 and the S&P 500 Consumer Discretionary Index. These indexes had respective returns of 0.61%, 0.31%, and 0.37%.

Ralph Lauren’s stock price hasn’t shown any signs of improvement this year. Its stock price has fallen more than 23% YTD (year-to-date) as of May 13, 2016.

In October and November, Lululemon Athletica announced several top-level management changes.

Shake Shack (SHAK) has an enterprise-value-to-revenue multiple of 13.9x, compared to the peer average of 3.5x.

Overall, analysts do not have a negative sentiment toward Nike’s stock, as the company has not received any “sell” recommendations yet. On September 20, 2016, the company had 21 “buy” and 12 “hold” recommendations from Wall Street analysts.

Nike (NKE) has a digital community of almost 70 million women around the world. What’s more, 54% of the runners logging a run in the Nike+ Running Club are women.

Key threats to the company include higher labor costs and greater regulation. After the Bangladesh factory tragedy, stricter regulations can be expected.

Retail and e-commerce sales—DTC or direct-to-consumer sales—are growing at a faster clip than the average growth rate for the company.

In fiscal 1Q17, Nike (NKE) repurchased 19 million shares for ~$1.1 billion.

Sports apparel as a category has been outpacing growth in 12 other retail segments for several months now. This should benefit sales for Lululemon (LULU).

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.

IBM intends to strengthen its presence in cognitive computing and machine learning space through Watson, which requires a vast pool of data.

As we discussed in the previous articles of this series, Under Armour (UA) is expecting to significantly grow both its top and bottom lines over the next few years.

Google and Levi Strauss unveiled a new collaboration. It embeds touch-enabled interactive technology in fabrics. It may revive the denim industry.

UA’s market share came in at 6%, and ADDYY’s came in at 3%. Hanes (HBI) took 3% of the market in 1Q15 .Nike (NKE) was the market leader for activewear overall.

Revenue gains for Nike (NKE) in 1H15 were broad-based. Sales rose for almost all key product categories, with the notable exception of the golf category.

The success of Nike’s and UA’s signature offerings may have spurred Adidas to change its strategy, such as signing more NBA stars and developing product.

Nike delivered an earnings beat in 3Q15—the 11th straight quarter that the company had come ahead of Wall Street earnings expectations.

The advance retail sales report for April 2015 was on the whole, mixed. The mixed readings in the retail sales report brought about indifferent reactions from markets.

In terms of endorsements, the last weekend in January was eventful for Under Armour. Tom Brady won his fourth Super Bowl. He wore Under Armour cleats.

The initial bullish reaction to Nike’s earnings stemmed from the upbeat futures orders reports, the higher-than-expected earnings growth, and upbeat outlook.

Nike is the world’s largest athletic footwear and apparel company. It dominates the sportswear market in Europe, China, and North America.

Despite Nike’s expanding margin and improved operating profitability, its margin and profitability still trail peers Under Armour and Lululemon Athletica.

Nike has a market cap of $96.5 billion. It rose by 0.62% and closed at $57.21 per share on August 18. Nike reported fiscal 4Q16 revenues of $8.2 billion.

Late last year and in early 2015, Under Armour acquired Endomondo and MyFitnessPal. Its fitness app user platform became the largest in the world.

The Nike+ Training Club clocked ~17 million downloads by 1Q15. The app is now available in 18 languages, creating the framework for a global community.

Since Nike reports financial results in US dollars, the performance of the dollar versus foreign currencies affects the company’s performance.

US dollar sales of athletic footwear rose 8% in the first quarter of 2015. Nike was the most dominant brand by far with a market share of 62%.

Nike (NKE) faces some challenges in its target markets. In the US, economic growth rates have tapered down, and the trade war could affect its China market.

While Nike derives most of its revenues from footwear products, it also sparks innovation in apparel technologies, such as Aeroloft, Dri-FIT, and Nike Pro.

Under Armour (UA) has an enviable earnings record. It’s beaten the market consensus on quarterly earnings and sales for over five years in a row.

Nike (NKE) has a market cap of $92.9 billion. It rose 1.7% to close at $55.34 per share on September 27, 2016.

Under Armour expects to earn revenue of ~$3.76 billion in 2015. This is an increase of 22% over 2014. Growth is expected in its North America and International segments.

Consensus Wall Street analyst estimates project Nike’s adjusted diluted EPS to be $3.58 in fiscal 2015, an increase of 19.7% over the previous year.

Skechers (SKX) products are sold in about 160 countries. The company’s international wholesale segment was its fastest-growing segment from 2011 to 2015.

Nike (NKE) fell 1.7% to close at $50.46 per share during the fifth week of November 2016.

Lululemon (LULU) stock rose 10.7% to $67.80 on March 30, 2016, the day the company declared its fourth quarter results. The stock has risen more than 29% year-to-date.

The ARMOURY stores will cater to the premium segment of the market. They’ll also feature UA product exclusives and occasional visits from star athletes.

In this series, we’ll analyze the results of the past quarter and the reasons why NIKE continues to outperform.

Nike rose 1.9% to close at $51.79 per share on December 20, 2016. The stock’s weekly, monthly, and YTD price movements were -0.98%, 1.7%, and -16.2%.

Nike released financial results for fiscal 2015 and 4Q15 after the market close on June 25. Both revenue and earnings were way ahead of market expectations.

Under Armour has become the number two player in the US activewear market in 2014, overtaking Adidas. It also benefited from the announcement of its connected fitness purchases earlier this year.

Nike’s performance over the past few years has been compelling. The company has beaten consensus Wall Street revenue estimates and earnings estimates.

Under Armour (UA), which overtook Adidas (ADDYY) last year as the number two US sportswear company, cemented its position in 1Q15.

Primarily an apparel player, Under Armour (UA) has stepped up its pace in entering new footwear categories.

IBM (IBM) is betting heavily on Watson, its cognitive computing platform, to steer the company towards much-needed growth.

Innovation and strong consumer demand enable NIKE to add more premium products to its portfolio. But its price-hiking strategies may not work everywhere.

In the US, in 2014 year-to-date, NIKE, Converse, and the Jordan brands combined accounted for over 60% of market share in athletic footwear.

The impact of adverse forex movements on UA’s financial performance may be mitigated somewhat by the stronger retail environment in Europe.

In February 2015, The Gap declared its 4Q14 results and reported net sales of $4.71 billion, compared with $4.58 billion for 4Q13, an increase of 3%.

In 2013, the company had 117 factory-house stores and 6 brand stores in North America. Store rollout is up and is expected to be stronger going forward.

In early March, Nike showcased its new self-lacing footwear. Also known as “HyperAdapt 1.0,” the shoes tighten up when the foot is placed inside them.

Nike may see strong traction in North America in 1Q16. Currency factors that tend to temper its top-line growth elsewhere have less impact on the segment.

Columbia Sportswear (COLM) rose by 13.7% to close at $55.54 per share at the end of the second week of February 2016.

LULU’s gross profit margin slipped from 55.7% in fiscal 2013 to 52.8% in fiscal 2014. The company’s operating profit margin slipped from 27.5% to 24.6%.

UA’s product, marketing, and sales teams each play an active role in the design process. This collaboration helps control brand and product consistency.

Under Armour’s sales grew by 30.8% in 4Q15 to ~$1.2 billion. Its 2015 sales rose by 28.5% to almost $4 billion, beating its own guidance of $3.9 billion.

For fiscal 2015, Under Armour posted international sales of $454 million—a 69% rise over 2014. In 4Q15, the company’s international sales rose by 69.8% YoY.

Under Armour’s revenues from its Connected Fitness initiative came in at $53 million in 2015, which was up from $19 million in 2014.

In 4Q15, Under Armour’s adjusted EPS came in at $0.48, beating the consensus Wall Street analyst estimate of $0.46 by 4.4%.

Nike’s EPS (earnings per share) have grown at a CAGR (compound annual growth rate) of 13.9% over the last five fiscal years.

North America is Nike’s (NKE) largest segment in terms of both revenue and operating profit.

Nike’s (NKE) DTC (direct-to-consumer) (XLY) (FXD) channel includes sales made online on Nike.com and through its own retail stores.

Innovation has been the cornerstone of Nike’s growth across the globe. It’s why the company has been able to sell more at higher prices.

Nike saw $1.2 billion in e-commerce sales in fiscal 2015. It grew its e-commerce sales by 56% in fiscal 3Q16, reporting higher traffic and conversion rates.

Growth company Lululemon Athletica (LULU) has revised its fourth quarter (fiscal 4Q16) and full-year (fiscal 2016) revenue guidance upwards.

E-commerce was one of the reasons Lululemon Athletica (LULU) had an upbeat performance in fiscal 2016. It posted e-commerce sales of almost $402 million, a 25% increase year-over-year.

In fiscal 2017, Lululemon Athletica (LULU) expects to grow revenue 10.9%– 13.3%, or $2.29 billion–$2.34 billion. Same-store sales growth is expected in the mid-single-digit range.

Over the next five years, Lululemon Athletica (LULU) is aiming to double its revenue to $4 billion with an expected mid-single-digit growth rate in store comps.

According to the Wall Street analyst consensus, Under Armour is expected to post revenues of $1.04 billion in the quarter, an increase of 28.8% over 1Q15.

Under Armour (UA) grew revenue by 30% to $1.05 billion in 1Q16. This was the company’s 24th straight quarter of more than 20% growth in its top line.

Under Armour’s (UA) footwear business registered an impressive 64.2% growth (VUG) rate in 1Q16 versus 1Q15. Footwear sales came in at $264 million in the quarter.

Under Armour’s (UA) international sales grew 55.6% to almost $150 million in 1Q16. Sales growth in overseas markets came in at 64.6% in currency-neutral terms.

Under Armour has added 250 shop-in-shops in Europe with retail partners as well as points of distribution in north and south Africa, the Middle East, and Turkey.

Under Armour (UA) has increasingly looked to “premiumize” its product line. Its signature Curry Two shoe retailed $10 higher than the Curry One and still experienced very strong sell-through.

Under Armour raised the higher end of its 2016 operating income estimate to $503 million–$507 million, implying a growth rate of 23.1%–24.1% over 2015.

The athleisurewear category has had a boost from higher interest in physical well-being globally and by increased participation by women in sports and other fitness activities.

The growing trend toward more casual apparel at work, higher sports participation, and more fitness activities for women is fueling a boom for activewear.

Activewear companies are looking to increase sales (XRT) from specific demographic segments, particularly women and young athletes.

Lululemon Athletica’s (LULU) management expects its fiscal 2017 diluted earnings per share to come in at $2.05–$2.15, an implied growth rate of 10.2%–15.6% year-over-year.

Based on Lululemon Athletica’s (LULU) healthy sales performance in fiscal 1Q17, the company has raised its sales and earnings per share outlook for the year.

To maintain its market share and drive sales, Skechers spends considerable time and effort in marketing activities to promote its footwear globally.

Athletic footwear brand Skechers operates around 525 company-owned retail stores around the world. Of these, around 395 are located in the United States.

Skechers designs footwear with its own in-house design team. However, it doesn’t own or operate any factories in which to conduct its manufacturing.

Between the start of 2012 and the end of 1Q16, Skechers added 114 net new stores in the United States and 81 in international markets.

After being a loss-making company in 2011, Skechers (SKX) has engineered a resurgence in financial performance from 2012 to the present.

Skechers (SKX) expects to open around 55–65 company-owned retail (XRT) stores in 2016, including 20–25 new store openings in China.