Under Armour's Got Thick Skin

Editor's note: This column was submitted by Stockpickr member Kurtis Anders.

The U.S. consumer is dead? Not for athletic apparel maker Under Armour(UA Quote - Cramer on UA - Stock Picks). The stock tore up most of 2007, starting the year at roughly $40 and reaching a peak of $73.40 on Aug. 9. That rise gave shareholders a chance to lock in a nearly 80% gain. The stock has since tempered, now trading back around $40.

Analysts have criticized Under Armour for a lack of ability to control marketing expenses, a lack of international exposure and the potential for slower growth. Full-year 2007 revenue was projected to be $560 million to $570 million, representing a greater than 30% growth rate over 2006. As if this were not a good enough reason to hop on the bandwagon, the company revised estimates two more times prior to the most recent 2007 full-year earnings release.

Just two weeks ago, the company raised its estimates to a range of $590 million to $600 million from $580 million to $590 million after its third-quarter report. Not only did Under Armour continue to raise estimates all year, it then came out and beat by an additional $6 million on the top line. It looks like the company has been sandbagging all year.

As the U.S. consumer looks to be cutting back on spending, Under Armour reported a 13% increase in selling price for its products in the fourth-quarter of 2007 over last year's selling prices. With the recent weak jobs report and data showing a slowed GDP pace, we know consumers are feeling the pain in their wallets, so the question is can they afford a 13% price increase. The answer lies in Under Armour's strong brand reputation and quality performance.

In its most recent conference call, management highlighted four main areas of focus for 2008:

1. Growth in men's and women's apparel
2. Increase share in the footwear market
3. A focus on international growth
4. Growing the direct-to-consumer sales business.

Those following the company know analysts have been all over the company looking for more international growth. I believe the company is up to the task with its hiring of Peter Mahrer in July 2007. He is part of a growing team that is focusing on the brand presence in the U.K., Germany and France. The company projects strong international growth during 2008 and estimates that it will grow a faster pace than its 26%-28% top and bottom-line estimates for the full-year.

Not only did the company begin to build a presence by hiring Mahrer, it's already projecting that license agreements will be announced during 2008. The youth segment looks to be performing very well overseas, and this serves the company well by targeting the young consumer whose parents are the ones footing the bill. Its 2007 results show a greater-than-50% growth rate in all youth products. I find this to be extremely promising for the future of Under Armour.

In line with Under Armour's commitment to the apparel business, former Izod employee Suzanne Karkus was recently hired to manage the apparel division. She was also a former president of Calvin Klein Jeans. She will be serving as the senior vice president of apparel for the brand. I believe she will be a huge asset for the company, opening a great opportunity for the company to leverage her experience in maintaining consistent growth turning their focus to the footwear market.

The Shoe's the Thing

Super Bowl Sunday marks the beginning of a new era for the brand when Under Armour launches its line of cross-training footwear, the Under Armour Performance Trainers. This is the first time the company has entered into marketing during the Super Bowl, and the ad will be airing during the first quarter of the Giants-Patriots game, which is expected to draw at least 100 million viewers.

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