This Key Initiative Means You Haven't Seen Anything Yet From Under Armour

Although still a relatively small competitor on the global stage, Under Armour is making strides in valuable sports segments like rugby and soccer, and investors stand to benefit.

Jun 8, 2014 at 10:00AM

Over the years, athletic apparel, footwear, and accessories manufacturer Under Armour (NYSE:UA) has  expanded its consumer base to include men, women, and children. The company's products are now also worn by athletes in most major sports as well as everyday folks in casual settings.

However, the company is also making a serious effort to expand its reach across the world to compete with athletic juggernaut Nike (NYSE:NKE) on a global  scale. With several new deals having been signed in recent weeks, and more sure to come, Under Armour seems poised for rapid international growth.


Source: Official Company Facebook. 

Newest deals
Under Armour's two latest  deals have the company expanding its footprint in the global sports arena. On May 20, the company announced a multi-year deal with Rugby Canada to become the club's official technical partner. As part of the deal, Under Armour will outfit all senior Rugby Canada teams as well as Men's and Women's Under 20 and Men's Under 17 teams. 

In a recent statement, Chief Executive Officer of Rugby Canada Graham Brown explained why the deal makes sense for Under Armour. He stated, "The sport of rugby is on the rise both on and off the field throughout Canada. This is highlighted by our National Men's and Women's teams' performances as well as our many new and exciting corporate partnerships. Under Armour will be providing elite performance apparel and products that both our players and fans will be proud to wear." 

On May 28, Under Armour announced another multi-year deal, this time with Cruz Azul, a professional Mexican soccer club. The five-year deal includes in-stadium signage, marketing use of club trademarks, as well as outfitting rights to Cruz Azul's youth teams. 

In the company's official statement, Executive Vice President of Global Marketing for Under Armour Matt Mirchin explained, "Cruz Azul is dedicated to winning trophies and the passion they bring to the sport of football never wavers." He continued, "They are one of the most decorated clubs in Latin America and their perennial domestic success continues to elevate their global significance. This partnership will go a long way in expanding our presence in football." 

Although Under Armour's agreement with Cruz Azul marks a significant achievement for the company, the deal is small compared to Nike's massive exposure to soccer, which is being highlighted currently at The World Cup in Brazil.

In addition to unveiling a revolutionary new soccer boot called Magista, Nike also has deals with some of the biggest clubs in the game, including 10 of the 32 World Cup national teams, chief among them host Brazil. Nike also sponsors individual soccer stars like Cristiano Ronaldo of Portugal and Wayne Rooney of England. 

Just like it took Nike many years to become truly competitive with Adidas in the global soccer arena, it will most likely take Under Armour years to become truly competitive with its much larger peers. 

However, management at Under Armour has been making all the right moves lately, and momentum is definitely on the company's side. In the last several years, the company became the technical partner for Tottenham Hotspurs of the Barclay's Premier League, Colo-Colo of the Chilean Premiere League, and Toluca of Mexico's Primera División.

The new markets Under Armour is entering, as a result of new signings, are contributing to the company's revenue growth. According to Yahoo! Finance, analysts project the company to grow revenue 25.7% in 2014, which compares favorably to Nike's 8.5% revenue growth for the fiscal year ending May 2015. 


Nike sponsor Neymar Jr. Source: Official Facebook. 

Bottom line
While the company's current lineup of sponsorship deals can't compare to industry titans like Nike, Under Armour is getting more aggressive with its signings lately. It may very well be only a matter of time before Under Armour is truly competitive with Nike on the global stage.

In the meantime, investors along for the ride stand to benefit from the company's significant expansions in sports like rugby and soccer. Accordingly, Under Armour remains the most aggressive long-term growth pick in the athletic manufacturing space.

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Philip Saglimbeni owns shares of Under Armour. The Motley Fool recommends Nike and Under Armour. The Motley Fool owns shares of Nike and Under Armour. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Jun 12, 2015 at 5:01PM

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