Under Armour’s (UA, Financial) growth has been very impressive over the last few years and I still think there is more to come. The company is slowly expanding its footprint across the globe and I expect its strong growth to push the stock higher.
Growth Is Not Over Yet
Although Under Armour cannot be compared to its rival Nike (NKE, Financial), it is worth investing in active apparel and accessories player Under Armour.
Under Armour is growing at a healthy rate, as in the most recent quarter, the company shared net revenue growth of 28% from the previous year quarter to $1 billion. However, the company’s profits declined year-over-year mainly because of injuries from the Sports Authority bankruptcy.
In spite of this trivial blotch, apparel net revenue surged 19%, international sales escalated 72% and direct to customer sales jumped 28% to $321 million. Moreover, the company’s online sales accounted for an enormous 32% of overall sales. This clearly means that the company is achieving robust profit without high overhead costs of continuing its stores.
Apart from this, the company also detailed that it has partnered with Kohl’s (KSS, Financial), which serves more discount-focused consumers. The clothes manufactured by Under Armour will go on sale at Kohl’s next year and could boost the company’s revenue.
Why China Matters
As China’s economy is improving, Under Armour is well positioned to benefit. With each passing day, the company is putting in a lot of effort to strengthen its presence in China. At present, international sales account for 15% of the company’s total sales, but it is highly likely that it will surge at a considerable rate in the imminent quarters.
The company has strategized to ramp up its growth plans in earnest. As a matter of fact, e-commerce revenue generated from China has formerly escalated 157%. The company also has plans to open around 150 new stores internationally, most of them located in China.
In the case of its running business, both women’s and men’s running businesses have more than doubled compared to 2015. Furthermore, with the support of two-time NBA MVP Stephen Curry, the high-end Curry 2, Under Armour’s basketball shoe, has turned into a top-selling product in China this year as well.
The company should continue growing in China, thereby boosting its international sales, which again is a positive for investors.
Conclusion
Under Armour’s growth has been very impressive, but it is still not over. The stock can still continue moving higher on the back of strong international growth, which is why I am bullish.
Disclosure: I don't hold a position in any of the stocks mentioned in the article.
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