Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Ralph Lauren Corp (RL), Columbia Sportswear Company (COLM), Under Armour Inc (UA): Fashion Brands Look to Capitalize on Emerging Markets

Page 1 of 2

Like so many companies in the consumer goods sector, fashion retailers are attempting to develop international platforms to acquire revenue from emerging markets. This has already proven fruitful for many of the early entrants, and now other firms are attempting to join the party in countries such as China, India, Brazil and Russia.

Ralph Lauren is one of the leaders in international expansion

Like many other companies in the consumer goods market, Ralph Lauren Corp (NYSE:RL) is making a bid for global expansion. While precise figures about sales in its new Hong Kong men’s luxury clothing store weren’t available, investors should watch for an idea of how sales are proceeding. A successful first few years will be a major indicator of the company’s ability to profit from the developing world.

According to Morningstar, the company has also invested a considerable amount of money during the economic downturn. This will prove valuable in the years ahead as it gives Ralph Lauren Corp (NYSE:RL) a solid foundation on which to grow. With a slew of new opportunities opening up overseas, Ralph Lauren Corp (NYSE:RL) has already established a platform that many businesses are now just attempting to assemble.

Its proactive strategy to acquire direct distribution control in markets such as South Korea and Japan, which are notorious for their desire to keep up with fashion trends, will secure additional footing for bountiful profits. Efforts like these have increased revenue abroad at a faster pace than in North America, where the brand is closer to full saturation.

Columbia is reaching full saturation in the U.S.

Columbia Sportswear Company (NASDAQ:COLM) will need to expand globally if it wants to increase revenue. The firm has reached close to full saturation in the U.S., making international expansion almost a necessity if it wants to grow. However, predicting the profitability of world economies is a bit of a guessing game.

That makes the company’s stock a wiser choice for long-term investors. I think developing nations will continue to prosper in the years ahead, but there could be some near-term grief before profits start rolling in. The company has built its brand to the point where it is highly touted and recognized throughout North America as providing some of the best sports and outerwear, and I think the quality will lead profits to echo in emerging markets.

As consumer spending continues to increase domestically (see chart below), the company’s products will be carried by more retailers.

US Consumer Spending data by YCharts

Under Armour stretches into yoga

Under Armour Inc (NYSE:UA) is looking to capitalize on the estimated $6 billion yoga industry. This could be the source of tremendous profits for the company, as the industry has grown at a rate of about 20% per year since 2004. With yoga companies capitalizing on people having extra cash and free time, an economic recovery could mean an even faster annual growth of the market. Much of that potential revenue is overseas, and the company would benefit from expanding its operations into other popular yoga territories.

As the appeal of Under Armour Inc (NYSE:UA) in the athletic wear category improves, the firm will more consistently be sought out by retailers looking to lower their reliance on NIKE, Inc. (NYSE:NKE), which has consistently taken the top spot among performance sportswear brands. Under Armour has its work cut out for it to overcome a company that has strong customer loyalty like Nike does, however. Under Armour Inc (NYSE:UA) will need to match Nike’s advertising budget if it wants to build its brand loyalty to a comparable level.

Page 1 of 2
Loading Comments...