Sunday, June 12, 2011

Under Armour

Under Armour
Shares of Under Armour Inc. gave up early gains Friday, a down day for the market, a day after revealing growth plans and new products that impressed some analysts.

The company, which sells athletic clothing, shoes and accessories at its own stores and other sporting goods stores, told analysts on Thursday about its plans to double 2010 sales, which were at about $1 billion, by 2013.

Under Armour also outlined plans for new products including water-repellent hoodies, according to analysts who attended Thursday's presentation at the company's Baltimore headquarters. Under Armour also hopes to expand in women's clothing with yoga pants and new sports bras.

The company also said it plans to remodel its stores and could open more. It also plans to update its fixtures and add floor space at some of the retailers where it sells its gear, including Dicks Sporting Goods Inc. and Sports Authority. It also plans to launch a new website to drive online shopping, according to William Blair & Co. analysts.

Stifel Nicolaus analysts upgraded the stock from "Hold" to "Buy," saying they were impressed by greater "management depth" and the detail of the company's growth plans.

But KeyBanc analysts Edward Yruma and Charu Sharma sounded a note of caution. They said that the push into women's clothing will put Under Armour in direct competition with fast-growing Lululemon Athletica Inc. They also noted that Under Armour, like other companies, faces rising costs for the raw materials it needs to make and transport its products. The company, they wrote, "has solid growth prospects, but ... there is not much room for error."

In April, the company said that first-quarter revenue rose 36 percent, and net income rose 69 percent.

Friday, the company's shares were trading down about 1 percent to $64.57 at midday after peaking as high as $67.07. Shares are still above Wednesday's closing price. The Dow Jones industrial average and the S&P 500 also were down about 1 percent.

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