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What You Need to Watch With Under Armour in 2013

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Editor's note: Under Armour does currently sell yoga apparel. 

Eric Bleeker: ...what to watch for in 2013, what opportunities Under Armour has, what's going to make this either a winner or a loser when it comes to investing this year?

Austin Smith: There's a few things that I think investors definitely need to keep a keen eye on with Under Armour in 2013, and one is their footwear segment. It's had a roller-coaster-type ride in the early stages. We saw $136 million in revenue during 2009. That dropped to $127 million in 2010, and then was back up to $182 [million] in 2011, so a bit of a roller coaster in the footwear segment.

Ideally, for a growth division, we want to see it going up, year after year. This is going to be a year for me where I'd want to see them put together back-to-back consecutive years of footwear sales growth. That will indicate they've been able to establish a brand, maybe steal a little bit of market share from Nike. If it dips back down, it could be evidence that this idea of Under Armour footwear is not resonating that well.

I'm definitely looking at other growth drivers, both in terms of attracting women -- I'd love to see them go for a more soft approach. Under Armour historically has been a really aggressive brand, targeted males, football -- but you can only lean on that so much.

I really would love to see them have a yoga division. I would love to see them target women more, and I would love to see a bigger international play.

Nike is really saturated domestically. They know their big growth is going to come internationally, so Under Armour, if they are the growth story we think they are, they could run out of a runway domestically very, very soon. Then they're going to have to look internationally, but if Nike's already been there for 10-15 years, investing heavily in establishing a brand in that market, you could find yourself without people to sell to.

I'd love to see Under Armour recognize that trend now, and start to go international at the same time as Nike in a big way, so that they don't lose out in five to 10 years when that's their only remaining growth path.

Eric: Yeah, that's a great point. The brand game is always funny, when you see which brands translate to different markets. It's a very nuanced and difficult-to-judge thing, but wait out too long, there's no shortage of people coming in before you.

I guess that's it for our look at Under Armour in 2013. Thanks a lot for that, Austin.

Austin: OK. Thanks, Eric. Fool on!

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