Under Armour Inc (UA): This Sportswear Company Is Spreading Its Wings

Next, the shortest route to getting international exposure is by sponsoring big events. But it will be sometime before Under Armour can scale up its promotions to any comparable level. Meanwhile, with the Fifa World Cup and the Olympics approaching, both Nike and Adidas are going for the kill. Nike is the official sponsor of the Brazil football team, while Adidas is one of Fifa’s six global partners. The big sporting events inevitably create ripples in market dynamics. In the London Olymics, Adidas narrowed its market share gap with Nike in the UK.

As we are one year away from the World Cup, Nike and Adidas are spending heavily on building the excitement over their brands. According to SEC filings, NIKE, Inc. (NYSE:NKE)’s future endorsements alone stand at $3.8 billion or roughly double that of Armour’s 2012 annual revenue.

Always an underdog

The global challenge is daunting for sure, but bigger players cannot ignore Under Armour Inc (NYSE:UA). It has already grown its share in the US sports apparel market to around 13.65%, according to SportsOneSource. This is not bad if we consider that market leader Nike has 24%.

It is also significant that Under Armour’s compounded annual growth rate (CAGR) in apparel over the last three years has been way ahead of either Nike or Adidas. Under Armour’s had a CAGR of 27.4% in this segment between 2010 and 2012, which is nearly triple that of Adidas’ 8.1% and more than double Nike’s 12.3%. This is definitely impressive even if we factor in that a smaller company will grow at a higher pace than industry veterans.

Last word

Under Armour Inc (NYSE:UA) is a company that investors have always associated with excellent rewards. With the company gearing up to cross borders, it looks like better things are in store. The increasing global demand gives it an excellent platform to fuel growth at the rapid rate that one has come to expect of it. There will be bottlenecks for sure but then Under Armour has this knack of overcoming the steepest of challenges.

The article This Sportswear Company Is Spreading Its Wings originally appeared on Fool.com and is written by Eshna De.

Eshna De has no position in any stocks mentioned. The Motley Fool recommends Nike and Under Armour. The Motley Fool owns shares of Nike and Under Armour. Eshna is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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