Under Armour Inc.’s new collection, UAS, is a departure from the company’s athleisure roots, which might not be for everyone. And that’s a good thing.
“[W]e believe the critical takeaway is that Under Armour is looking to extend its reputation beyond athletic gear and into your everyday wardrobe,” Nomura analysts wrote in a note published Monday. “…[A]lthough some runway items may draw puzzled looks… in our opinion, the majority of showcased product is not intended to sell en masse anyway.”
Analysts from Nomura attended a New York Fashion Week event hosted by Under Armour to present the new line. Analysts there, and elsewhere, view it as a way to target millennials and luxury shoppers far into the future.
“[I]t is meant to give Under Armour permission to sell chinos and button downs (along with their shirts and shoes), ironically looking to expand from the investor-coveted athletic space into the fickle world of fashion apparel,” Nomura wrote.
UAS launched on Thursday, and includes men’s and women’s apparel, accessories and shoes priced from $59 to $1,500. Items are available at Barneys New York, online at the UAS website and with exclusive e-commerce partner Mr. Porter, and at Under Armour shops in New York and Chicago. Merchandise will also be available at the company’s Boston store in November.
UAS isn’t an indication that Under Armour is cutting its athletic roots. Instead, the company hopes to expand on them.
“I think the consumer in the athleisure or athletic or sporting wear is healthy. I think it’s growing,” said Chip Molloy, Under Armour’s chief financial officer, during the Goldman Sachs Global Retailing Conference on Sept. 7, according to a FactSet transcript.
Still, Molloy believes there are “pockets of growth” available in the lifestyle area, which can be leveraged with the new UAS line over the longer-term.
Nomura analysts say there is opportunity to go beyond the traditional competition, like Nike Inc. with the new collection.
“To us, UAS seems less Nike Sportswear and more traditional fashion, suggesting a push to take share from the non-athletic side of our coverage,” their note said.
The sportswear line is also a chance to reach millennials.
“The target audience for UAS is men and women between the age of 25 and 30 years old who are looking for everyday fashion with innovation for off-the-field,” Cowen and Company wrote in a note published Friday.
Items in the collection stick with some of the qualities that have become common across athleisure, such as innovative fabrics that are water-resistant or contain generous stretch.
“Under Armour currently has very minimal share, roughly 1%, of the substantial $15 billion market for sportswear, and management sees UAS as a long-term stepping stone to expanding its runway and creating a halo effect for the Under Armour brand as a whole,” Cowen wrote
Analysts at Deutsche Bank say they “liked what they saw” of the collection, but believe “there were many pieces featured that wouldn’t be broadly ‘wearable’ by the public.”
However, there have been no updates about near-term financials, and little has been discussed about the outlook for UAS. Analysts maintained their buy rating in a note published Friday, and their $53 price target.
“Our checks suggest that revenues are on track, and with inventories better positioned into the second half, Sports Authority headwinds seemingly less severe/lengthy than anticipated, and with a potentially more seasonal fall/winter, we see room for P&L upside,” Deutsche Bank wrote.