Super Retail Group plans Armour-ed offensive

Super Retail Group is in talks with US sportswear giant Under Armour to expand its presence here.

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

US sportswear giant Under Armour (NYSE: UA) has named Australia as one of its key growth markets in its new quest for international expansion. Under Armour was founded by Kevin Plank in his basement in 1996 and has grown rapidly by offering high quality and technologically advanced sportswear. The Australian offensive is part of the company’s plan to double its global sales to a total of $US4 billion by 2016.

It doesn’t look like it will be battling solo however. There are reports that Under Armour is close to completing a deal with Rebel Sport, a subsidiary of Super Retail Group (ASX: SUL), that would give Rebel Sport exclusive distribution rights within Australia. As part of the deal, Rebel would help Under Armour to establish a foothold and make significant investments to promote the brand. Rebel would then assist Under Armour in establishing its own standalone stores – a milestone the company has said it wants to achieve within the next two years.

Rebel Sport’s performance has been transformed since it was acquired by Super Retail Group for $610 million in late 2011. Management has refocused the brand on volume and value by lowering prices to stimulate foot traffic. The strategy has paid off with the company announcing in May that year to date sales volumes had grown 7.8% versus the same period last year. Rebel currently stocks a limited range of Under Armour products.

At present only 6% of the Under Armour’s sales are outside of the United States.  However it plans to double that share by 2016, and clearly sees itself as an emerging global brand.  When speaking about its international prospects, Karl-Heinz Maurath, Under Armour’s President of International, emphatically stated “There are huge, huge opportunities for Under Armour out there”.  The company will also be opening stores in nine other countries.

Under Armour will be joining a wave of international clothing brands expanding in to Australia, such as Zara, H&M, and Abercrombie & Fitch. The entry of a sophisticated global brand like Under Armour will be a particular threat for specialist sportswear retailers such as The Athlete’s Foot, a subsidiary of RCG (ASX: RCG). Under Armour’s latest innovation is the ‘SpeedForm’ shoe, which took inspiration from Apollo space suits, and was manufactured primarily from a single piece of material that doesn’t require stitching. The Athlete’s Foot specialises in exactly the type of hi-tech footwear that Under Armour has sought to disrupt.

With no deal signed yet, the full details are still to be revealed. Super Retail Group will be hoping that increased association with the hi-tech innovator will boost consumer perception of the Rebel Sport brand. The deal will also suit Rebel’s strategy of increasing foot traffic by drawing in customers that are seeking out Under Armour’s specialist range. Success will depend on whether these customers can then be tempted to purchase other products from Rebel’s lineup.

Foolish takeaway

Under Armour has quickly emerged as a sportswear powerhouse and is now poised to take its rightful place as a global brand. Super Retail Group may appear to be encouraging the competition by assisting Under Armour’s international expansion, but management has likely concluded that when a major international brand is entering your home turf, it’s better to be with it than against it.

Searching for the stability of a solid dividend payer? Get “3 Stocks for the Great Dividend Boom” in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!

More reading

Motley Fool contributor Matt Joass does not own shares in any of the companies mentioned in this article.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

asx share price competitions represented by businessmen arm wrestling
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

person reading news on mobile phone
⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »