• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • TheStreet Smarts
  1. Home
  2. / Investing
  3. / Consumer Staples

Under Armour Needs to Revamp Its Women's Apparel Segment, Analysts Say

The right female athlete or celebrity endorser could turn around the segment's fortunes. 
By TONY OWUSU
Apr 11, 2016 | 12:30 PM EDT
Stocks quotes in this article: UA, DKS

Analysts at Morgan Stanley might be overreacting to golfer and Under Armour (UA) endorser Jordan Spieth's meltdown at the Masters Sunday afternoon. Either that or they genuinely see weakness in the sports apparel company's fundamentals, as Morgan Stanley slashed the Growth Seeker holding's price target.

Citing slowing U.S. wholesale apparel sales growth -- particularly in the women's apparel segment -- the firm maintained its Underweight rating while cutting its price target in half, to $32 from $64.

"SportScan data shows -2% 1Q total UA US wholesale apparel growth and -7% for women's apparel: This is in-line with 4Q trends. Some argue SportScan doesn't capture all of UA's business, which is true. However, UA's own SEC filings show sales to its biggest customer, which we believe is Dick's Sporting Goods (DKS), were -8% in 4Q15," analysts at the firm wrote. SportScan data shows that Under Armour has lost apparel market share for the first time in three years.

According to Morgan Stanley, Under Armour could use a strong performance from a female endorser as the company's women's apparel segment continues to lag.

Much of the company's growth over the last three years has been due to the visibility of its top endorsers, but those endorsers have been male athletes. 

Read Jim Cramer's take on Under Armour

Under Armour has been savvy in terms of which athletes it chooses to sign to endorsement deals. In fact, between Stephen Curry and Jordan Spieth, the company's roster of athletes had an unprecedented run of success last year. Curry won the NBA Most Valuable Player award on his way to also winning a world championship with the Golden State Warriors last season. In January 2015, golfer Jordan Spieth started the year off by signing a new 10-year endorsement extension with Under Armour after ripping up his old two-year contract. Three months later, Spieth won the Masters. He then won his second consecutive major at the U.S. Open on his way to winning the PGA Player of the Year and PGA Tour Player of the Year trophies in 2015.

"We doubt UA would argue that its women's apparel business is performing the way it wants. However, UA has a new team in place to improve the performance of that business. We expect a major new product assortment launch this fall which will be much more fashion-forward and athleisure-ish than anything UA has ever done. We also anticipate UA will have a major celebrity collaborator attached to the project," the Morgan Stanley note read.

Despite the headwinds presented by that lagging sector, Morgan Stanley is still bullish on Under Armour's management team, going so far as to call CEO Kevin Plank one of the most highly successful entrepreneurs of his generation. Overall it is still bullish on the company itself also, saying "of course" Under Armour is a terrific brand.

But the analysts added that Under Armour's "products for women are lacking the fashion component today's consumer is demanding and can now easily get from the multitude of new brands that have emerged as legitimate competition." While analysts noted that UA is attempting to fix this issue, it remains unclear if it will work. If not, the firm wrote that "it will be hard for UA to replace the growth it is expecting in this category." Women's apparel accounts for 20% of U.S. sales growth that Morgan Stanely analysts have forecast for the company over the next four years.

So, the magic Under Armour's team has shown in choosing athlete endorsers may need to be replicated once more with a woman. Maybe they can steal Mixed Martial Arts star Ronda Rousey away from Reebok. Or sign WNBA all-star Skylar Diggins to a shoe deal. Regardless of who they choose, Under Armour needs to pay greater attention its women's apparel segment if it hopes to reach its near-term sales goals.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

Employees of TheStreet are restricted from owning individual securities.

TAGS: Investing | U.S. Equity | Consumer Staples

More from Consumer Staples

General Mills Shares Have Eaten Their Wheaties

Bruce Kamich
Jul 13, 2022 9:03 AM EDT

Let's see if the strength can continue.

I'm Not Convinced PepsiCo Is Ready to Pop

Bruce Kamich
Jul 12, 2022 8:03 AM EDT

The beverage giant just posted a second-quarter earnings beat, but whether its stock can push through technical resistance remains to be seen.

3 'Hiding Places' for Investors to Shelter in This Bear Market

Stephen Guilfoyle
Jul 5, 2022 10:00 AM EDT

These stocks have done me right of late, and are in better technical shape than the market.

I'm Intrigued as Kellogg Splits Into 3: Here's the Play

Stephen Guilfoyle
Jun 21, 2022 10:15 AM EDT

The company, despite a nice looking first quarter, has not been in the greatest shape fundamentally.

Any Bounce in This Nasty Bear Market Should Be Viewed With Caution

Bob Byrne
May 11, 2022 8:30 AM EDT

For now, any rebound is a short-term trading opportunity and nothing more.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 10:24 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    To Improve Your Trading and Investing, Spend More ...
  • 08:44 AM EDT PETER TCHIR

    CPI Beats Expectations, But Maybe Not the 'Whisper'?

    Slightly better-than-expected inflation across the...
  • 01:44 PM EDT STEPHEN GUILFOYLE

    This Holding Lights Up With Strong Earnings

    Check out the latest from TheStreet's Stocks Under...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login