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Transcript:
Eric Bleeker: All right. Let's go to Under Armour. This has been an explosive company. The Nike for a new generation, if you want to call it that. What are some things that you like about Under Armour right now?
Austin Smith: This is a growing company in a growing space. You see revenue and earnings both up 27% in the last 12 months -- pretty impressive. The whole athletic apparel space, although it's a mature market, it's growing at rates that it hasn't grown at in 15 years past, because there's this whole healthier-eating and healthier-being revolution.
It's the same movement that's pushed Whole Foods to be a 30-bagger for early investors. It's the whole movement that's made [lululemon athletica] such a phenomenal investment.
People have gotten into this whole wellness, fitness revolution, and Under Armour is perfectly poised there. They're a fast-growing company in what is a mature but still expanding market. We love that.
Some of the biggest reasons to sell Under Armour in the past, things like overheating inventory, have cooled down a bit. Their inventory has actually grown at a slower pace than revenue in the last three to four quarters, which is very important.
That was one of the things that people were so worried about. You see inventory rising faster than revenue. That's one of the scary things that you see in retailers, particularly apparel retailers, and Under Armour recognized the risk and managed it appropriately, so one of the big knocks against them has been cooled off a bit.
They've got new segments that they're growing into. Footwear, yoga -- this is Nike and lululemon's game to lose, basically. Nike, as big as they are and as great of a company as they are, they can really only lose market share in this space.
Eric: I agree. You look at how global different industries are -- technology, energy -- how effective it is. Well, retail is a global industry too, and we're looking at a very small presence for Under Armour. It's nothing but upside.
