Under Armour Lacks an Edge, but the Activewear Market Is Attractive and Offers 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 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 are little changed over the past seven years as it has been challenged by major competitors like wide-moat Nike and new entrants alike. While Under Armour’s new Protect This House 3 plan is designed to make the brand more competitive in the U.S. through its merchandising, e-commerce, and supply chain efforts, we think it has fallen behind on innovation, sponsorships, and style.