Apparel remains a primary growth engine for Under Armour, representing about three-quarters of Under Armour’s revenue mix and posting 18 straight quarters of 20%-plus growth. Despite concerns over maturation, Under Armour’s men’s apparel business continues to post strong double-digit gains, with innovation (i.e., Charged Cotton, ColdGear Infrared, and ArmourTech) the key driver.
Women’s continues to benefit from new leadership as well as a strong commitment from the company highlighted by the rollout of a key advertising campaign featuring ballet dancer Misty Copeland during the back-to-school season. Management believes that its three Brand House stores, which feature its full assortment of women’s and footwear, serve a critical function in educating wholesale partners about the potential for Under Armour while also better enabling the international business (which will likely feature more shop-in-shops and franchised stores given the relative dearth of high-quality big-box sporting goods retailers abroad).
Management continues to view Under Armour as a wholesale business, with the primary goal of driving healthy comp gains for its retail partners. Innovation in footwear has also proved a positive, with the new SpeedForm running shoes helping drive a 41% lift in footwear sales in the first quarter to 18% of total sales. In China, where Under Armour debuted as an integrated athletic brand (with apparel and footwear), footwear is trending at 40% of sales, versus 10% to 11% for Under Armour’s domestic wholesale partners and 20% to 25% in Under Armour’s direct-to-consumer business.
Management continues to view international as the biggest opportunity for the brand and expects it to reach 8% to 9% of sales this year (versus 6% in 2013) with a goal of reaching 12% of sales by 2016. Under Armour has been aggressively hiring experienced international talent to lead the charge in key regions to support future growth, with roughly 400 global stores expected by year-end (primarily shop-inshops or branded shops with partners) versus about 100 at the beginning of the year.