Under Armour shares have tumbled 32% to date this coming year. Barron’s says that could set the stock up to get a rebound but FBR analyst Susan Anderson sees more to pain to come.
The corporation is in the middle of an “intensifying” price war with Nike, Anderson wrote to clients on Monday. Under Armour’s recent decision to market its clothes at discount retailer Kohl’s seems to have made Nike amp up its own promotions. This competition in the price front doesn’t bode well for Under Armour’s profits, a measure of how much of every dollar in sales the company can retain as earnings.
Nike seems to be outdoing under armour outlet melbourne on the product front, too. Nike has some promising new items, like its VaporMax shoes that are “driving shelf space gains,” Anderson wrote. “However, Under Armour doesn’t have anything new out so far this coming year, but instead higher price points.”
FBR’s recent consumer survey indicated that customers are not as likely to pay for in excess of $100 for less than Armour footwear than they were this past year. Meanwhile, Under Armour intends to offer 86dexnpky running footwear this season that are more expensive than $100, versus just eight this past year.
Nike’s not the only person using the possible ways to hurt Under Armour. Adidas, Reebok, and Champion products seem to be encroaching on the quantity of space dedicated to Under Armour at Dic-k’s, especially in relation to kids’ apparel, in accordance with FBR’s channel checks.
Anderson downgraded shares to “underperform,” indicating she thinks the stock will trail the broad market. She set a value target of $14, 29% below recent levels.
Big Picture: Under Armour may be sacrificing profits by selling its apparel at Kohl’s. As well, a recently available consumer survey indicated that individuals are less ready to pay big bucks for that company’s shoes.