UnderArmour Is Blowing Up

[Tugg Speedman]

I've been looking for a reason to buy UAA, this recent sell off may be it. There is still a lot to like from the company. It grew revenue at 22%, footwear revenue grew 36%, international sales increased by 55%(60% if you factor out the strengthening dollar), BTW international sales only make up about 15% of revenue so there is plenty of room for growth there. Direct to consumer revenues were up 27% that now accounts for 30% of the business making the company less reliant on retail stores, which had a brutal Q4. The CEO is confident that they can return to 20% annual revenue growth soon.

I would be a buyer under $20 bucks/share and realize it will take some patience but I do think this may be a good long-term buy.

I don't disagree with this but I cannot believe UAA fell apart this bad to even allow this to happen in the first place.

[Tugg Speedman]

Under Armour is down 32% YTD, it now ranks as the worst stock in the S&P 500 Year-to-Date.

This is self-inflicted as Nike is UP 8% YTD.

Steph Curry and Jordan Spieth call your agents.  The lucrative endorsement deal you had with UA that you thought would make you gazillions, you're now at risk that this entire time you have been Pitching their product for nothing.

[MU82]

Nike is one of the iconic brands in the world. There are people in Africa who don't even have ways to communicate who somehow know the "swoosh." All others have miles to go to catch up.

NKE has nice profits, growing earnings, a growing dividend, a proven strategy and a proven track record. It is "expensive" by P/E ratio but historically it has always traded at a premium and nonetheless rewarded shareholders.

UAA? Let me know when its revenue is even a fifth of Nike's.

There's a reason Morningstar says Nike is a wide-moat company with exemplary management and UAA is a narrow-moat company with "standard" management.

[tower912]

I think Under Armour is being more affected by the retail meltdown than most.    I remember that they took a bath when Sports Authority went under.    I know that MC going belly up isn't helping.   Nike is so big and has so many outlets and so many different product streams that they can weather it better.   

[wadesworld]

I think Under Armour is being more affected by the retail meltdown than most.    I remember that they took a bath when Sports Authority went under.    I know that MC going belly up isn't helping.   Nike is so big and has so many outlets and so many different product streams that they can weather it better.   

Bingo.

[rocket surgeon]

I think Under Armour is being more affected by the retail meltdown than most.    I remember that they took a bath when Sports Authority went under.    I know that MC going belly up isn't helping.   Nike is so big and has so many outlets and so many different product streams that they can weather it better.   

that's a pretty big melt due to retail...if that were the case, wouldn't people be grabbing with both hands by now?  i mean, the jobless rates/unemployment numbers are all down meaning the retail "meltdown" should be very temporary as all these gainfully employed people will soon have more disposable income

[MU82]

I think Under Armour is being more affected by the retail meltdown than most.    I remember that they took a bath when Sports Authority went under.    I know that MC going belly up isn't helping.   Nike is so big and has so many outlets and so many different product streams that they can weather it better.   

Could very well be, tower, but it's also a case of it moving up too high too fast. A lot of times companies peter out in such situations, especially when they are nowhere near the leader in the industry.

As an investor, I am a big fan of owning the No. 1 brands in their industries. Nike, Starbucks, JNJ, 3M, MO, etc.

[tower912]

Could very well be, tower, but it's also a case of it moving up too high too fast. A lot of times companies peter out in such situations, especially when they are nowhere near the leader in the industry.

As an investor, I am a big fan of owning the No. 1 brands in their industries. Nike, Starbucks, JNJ, 3M, MO, etc.

It could be a little of both.     They were expanding and getting into new product lines and trying new things just as sporting goods retail contracted.   

[Tugg Speedman]

that's a pretty big melt due to retail...if that were the case, wouldn't people be grabbing with both hands by now?  i mean, the jobless rates/unemployment numbers are all down meaning the retail "meltdown" should be very temporary as all these gainfully employed people will soon have more disposable income

Don't confuse "buying stuff" with "brick and mortar retailing."

Jeff Bezos net worth just crossed $76 billion passing Warren Buffett as the #2 richest man in the world.  In addition, over half the households in the US now have an Amazon Prime account.

On the other side of this ...the state of brick and mortar retailing is worse than the Great Recession and when it's over, I fear we just won't gut the retailing industry, the builders of the stores, and the suburban mall, but the Amerian culture around driving and shopping.

America’s Retailers Are Closing Stores Faster Than Ever
April 7, 2017, 9:11 AM CDT
https://www.bloomberg.com/news/articles/2017-04-07/stores-are-closing-at-a-record-pace-as-amazon-chews-up-retailers

[rocket surgeon]

ok, retail as in stores, i get that.  but still-people should still be coming in to more money as the jobless rate decreases.  if they aren't going to stores, then they are buying chit on amazon prime, like me.  i make most of my purchases online with the exception of groceries and gas and a few other things i may want more immediately.  if i want me some UA shoes-hello amazon

one night, about 9 or or so, i remembered i wanted this combination door knob entry-ordered on amazon and by noon the next day it was at my door step.  i realize that may be considered slow, very soon,  i've heard there are some areas you can be guaranteed delivery within 3-6 hours. 

[Tugg Speedman]

Manhattan Vacancy Rates, Retail Store Fronts

2017: 18%
2016: 10%
2015: 7%
2014: 5%

C&W Research, Douglas Elliman data

[keefe]

The number of Y hats you see around the world is as high or higher than the number of Harvard sweatshirts. A UA logo on each of those will go a long way to furthering their brand. Nobody watches american football outside of the US because it's a boring sport, but people all over the world aspire to attend Yale University.

As a brand both Harvard and Yale are at the pinnacle of American and global names. One will do well by either.

One take on the issue has Harvard being a stronger brand than Yale on the basis of cost, career advantage, campus/community, and student body.

http://www.businessinsider.com/harvard-vs-yale-2013-4

But as with all such situations the specifics are what matter. If one is interested in the fine arts then Yale is the obvious choice in the same way that economics, politics, and the hard sciences are better at Harvard.

In my case, when looking at MBA programs I had HBS at the top of my list but didn't apply to Yale.

Are there more Y hats in the world than Harvard sweatshirts? Who knows and, if so, what does that mean? Both are stellar brands.

If branded apparel is an indicator then I would argue that Michigan is the superior name as U of M gear is ubiquitous all over the world.

The specifics of curricula reminds me of when TAMU chastised me for comparing Michigan more favorably to Northwestern. Fact is, for my course of study, graduate work in engineering (aeronautical,) one would always choose Michigan over Northwestern for both grad and undergrad study. 

https://www.usnews.com/best-graduate-schools/top-engineering-schools/eng-rankings

[keefe]

Most people I see with a "Y" on their hats are LDS.

The "Polygamy Y" is to the west what the "ND" is to the Northeast.

Talk to folks sporting either of these logos and two facts will emerge - both will have vested a grossly overblown sense of greatness in said institution and the majority will not have actually attended the object of their adulation.



 

[Strokin 3s]

Could very well be, tower, but it's also a case of it moving up too high too fast. A lot of times companies peter out in such situations, especially when they are nowhere near the leader in the industry.

As an investor, I am a big fan of owning the No. 1 brands in their industries. Nike, Starbucks, JNJ, 3M, MO, etc.

The old Jack Welchism, of "I want to be #1 or #2 in every line I am in or I want to be out of the line of business."  Worked well for GE under his leadership.

[keefe]

The old Jack Welchism, of "I want to be #1 or #2 in every line I am in or I want to be out of the line of business."  Worked well for GE under his leadership.

Minor yet significant clarification: Welch's mandate was that if a business was not #1 in its space then there had to be a clear path to become so while still delivering GE-level return.

[Eldon]

https://www.yahoo.com/style/stephen-curry-shoe-designs-roasted-143659106.html

Steph ain't helpin much either, ainta'?  New shoe just out, currently being ROASTED on Twitter lol

[Eldon]

As a brand both Harvard and Yale are at the pinnacle of American and global names. One will do well by either.

One take on the issue has Harvard being a stronger brand than Yale on the basis of cost, career advantage, campus/community, and student body.

http://www.businessinsider.com/harvard-vs-yale-2013-4

But as with all such situations the specifics are what matter. If one is interested in the fine arts then Yale is the obvious choice in the same way that economics, politics, and the hard sciences are better at Harvard.

In my case, when looking at MBA programs I had HBS at the top of my list but didn't apply to Yale.

Are there more Y hats in the world than Harvard sweatshirts? Who knows and, if so, what does that mean? Both are stellar brands.

If branded apparel is an indicator then I would argue that Michigan is the superior name as U of M gear is ubiquitous all over the world.

The specifics of curricula reminds me of when TAMU chastised me for comparing Michigan more favorably to Northwestern. Fact is, for my course of study, graduate work in engineering (aeronautical,) one would always choose Michigan over Northwestern for both grad and undergrad study. 

https://www.usnews.com/best-graduate-schools/top-engineering-schools/eng-rankings

A few years back me and Heisenberg went back and forth on this exact same question.  IMO Michigan is vastly underrated as a school overall.  I think the rank misperception vis-a-vis a school like Nwestern is that the latter is always near the top in Bschool and law school rankings, both of which are widely published/talked about in the popular press.

[Tugg Speedman]

What in the World Is Causing the Retail Meltdown of 2017?
In the middle of an economic recovery, hundreds of shops and malls are shuttering. The reasons why go far beyond Amazon.
The Atlantic
April 10, 2017

https://www.theatlantic.com/business/archive/2017/04/retail-meltdown-of-2017/522384/

[Tugg Speedman]

UnderArmour continues to be a catastrophe ...

This year (Since December 31)

UnderArmour (UAA) is DOWN 43.51% (at $16, a five year low.  Was $54 in Sept 2015 )
The S&P 500 is UP 16.79%
Difference 60.30%

How bad is it getting?

Under Armour Co-Founder Kip Fulks Takes Sabbatical
Sportswear maker mulls exiting smaller sports categories such as tennis and fishing

https://www.wsj.com/articles/under-armour-co-founder-kip-fulks-takes-sabbatical-1508780413

Under Armour recorded its first ever losses as a public company in the first two quarters of the year, and in August announced layoffs and a restructuring. The company is expected to report third-quarter results on Oct. 31. Analysts polled by FactSet expect earnings to fall by a third to $84 million on revenue of $1.48 billion, or little changed from a year earlier.

[Tugg Speedman]

Underarmour reported their earnings this morning and it was bad (again) ...

Under Armour slashes full-year outlook, sending shares tumbling
* Under Armour reduced its full-year sales expectations, "reflecting lower North American demand and operational challenges."
* The company also slashed its 2017 earnings-per-share forecast.
* Under Armour shares have fallen more than 40 percent in 2017.
Lauren Thomas
Published 1 Hour Ago  Updated Moments Ago

https://www.cnbc.com/2017/10/31/under-armour-q3-earnings-2017.html

Weaker demand for Under Armour products across North America is clearly hurting the Maryland-based retailer.

On Tuesday, the athletic footwear and apparel company trimmed its profit and revenue expectations for the full year, citing a "difficult backdrop" in North America — its largest market by sales.

The company reported third-quarter revenue that fell short of analysts' expectations, as it booked an $85 million charge for restructuring efforts during the period.

Shares of Under Armour were falling around 17 percent in premarket trade on the news.

---

As I noted in the post above, Underarmour's stock was down 43% this year.  And another 17% loss to that today for this horrible earnings report.

And it is down 75% from its September 2015 high when CEO Kevin Plank was a genius and athletes Seth Curry and Jordan Speith begged to get an endorsement deal so they could be paid in UAA stock options.  Now it looks like they will get nothing from the deal as they own a lot of worthless stock options.

[MU82]

I hope most Scoopers steered clear of UAA. Troubled company in a highly competitive industry.

In these situations, I either avoid or go with the clear leaders. Every once in awhile, I miss an up-and-comer, but overall buying the iconic brand has worked out pretty well for me. Even when UAA was flying high, Nike was crushing it as a business. I mean, it wasn't even close.

[Tortuga94]

I've been looking for a reason to buy UAA, this recent sell off may be it. There is still a lot to like from the company. It grew revenue at 22%, footwear revenue grew 36%, international sales increased by 55%(60% if you factor out the strengthening dollar), BTW international sales only make up about 15% of revenue so there is plenty of room for growth there. Direct to consumer revenues were up 27% that now accounts for 30% of the business making the company less reliant on retail stores, which had a brutal Q4. The CEO is confident that they can return to 20% annual revenue growth soon.

I would be a buyer under $20 bucks/share and realize it will take some patience but I do think this may be a good long-term buy.

Yikes!!! Got in at around 19, sold around 17. Realized that I made a mistake, and moved on. When you go dumpster diving, you do sometimes end up with trash. In a year like this though it didn't hurt us at all when we have killed it on other stocks.

[MU82]

For Mr. Market, there often is guilt by association. So as a Nike shareholder, I am heartened that NKE is down only a fraction of a percent today despite Under Armour being down 15%.

NKE has had a little bad news lately, too, but it has been very resilient, always bouncing off its bottom (and you know how painful that can be -ha!).

[Litehouse]

It will be interesting to see if this impacts any of UA's endorsement/sponsorship deals.  The Steph Curry and Jordan Spieth deals included large chunks of stock as part of the payments, so they're only worth a fraction of what they thought they were initially.  I don't know how a lot of their university agreements are structured, but if they include stock those schools will be getting a lot less than they thought they were.