Under Armour Lacks an Edge but Competes in Categories With Growth Opportunities

We view Under Armour as lacking a moat, given its failure to build a competitive advantage over other athletic apparel firms. Between 2008 and 2016, the firm’s North American sales (around 70% of its consolidated base) increased to $4 billion from $700 million and it passed narrow-moat Adidas as the region’s second-largest athletic apparel brand (after wide-moat Nike). However, Under Armour’s North America sales have not grown over the past six years as it restructured and demand for performance gear, its primary category, has lagged that of athleisure. While sales of all activewear have been strong during the pandemic, we think Under Armour has fallen behind on innovation and its product is not sufficiently differentiated. The firm plans to introduce more casual apparel items, but these products are unlikely to generate material sales given the intense competition.