January 28, 2016 | 8:43 AM by Fahad Khalid | fkhalid@jaguaranalytics.com

Overlooked Part About Under Armour (UA) Growth Story

 

Summary from Barclays:

We believe partnered stores is most overlooked today by many investors, which in isolation could contribute $1.76 in incremental EPS by FY20. The company has announced plans for 700 partnered stores by FY18 (vs. 80 in FY14), which we believe could grow to 1,060 by FY20. These stores operate under a wholesale profit model (we estimate a ~28% gross margin), but with a minimal expense structure to UA equates to a highly profitable channel. Furthermore, we believe growth associated with partnered store openings is highly likely to materialize and comes with substantially reduced risk to UA than the DTC channel.

The DTC channel also provides substantial growth for the company, with an estimated $2.72 in incremental EPS by FY20. Our estimate for $1.7 billion in ecommerce revenue by FY20 appears conservative in light of NKE’s goal of $7.0 billion by FY20 and UA’s connected fitness investments.

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