Why the Kohl’s, Under Armour Partnership May Not Be As Successful As Experts Had Hoped

While many investors had cheered Under Armour’s decision — announced last July — to launch in Kohl’s stores this year, at least one analyst now says that a visit to check out the department stores’ UA offerings has left him with several new concerns.

Kohl’s Under Armour assortment is presented well but may not be appropriately segmented,” Susquehanna Financial LLLP analyst Sam Poser wrote today. “We were very impressed with the merchandise presentation of the Under Armour brand within Kohl’s … However, within men’s and women’s apparel, 50 percent (maybe a bit more) of the styles are also available at Dick’s [Sporting Goods].

Poser said he was concerned that Dick’s merchants “will not tolerate overlap with Kohl’s” and that “Under Armour will be at risk of losing even more share.”

After a successful run in 2015 and early 2016 — spurred by superstar athlete partnerships, most notably Stephen Curry’s signature line — Under Armour’s growth spurt appears to be tapering with its stock also seeing significant pullback.

Despite Under Armour’s insistence that the Kohl’s deal would help boost growth — UA founder and CEO Kevin Plank said last year that he saw the partnership as an evolution for the brand and a means to reach more female consumers — Poser said he found minimal advantages to the partnership.

“Selling Kohl’s does little to enhance the Under Armour brand, especially when there’s the need to build a lifestyle business,” Poser wrote.

On the positive side, the analyst noted limited overlap with styles at Kohl’s and Dick’s Sporting Goods within total footwear and kids’ apparel.

When Under Armour announced the Kohl’s deal last summer, some analysts suggested that a move to Kohl’s would take the label down market, but Plank assured investors that the brand would “continue to have elevated product there.”

We think Kohl’s is a great evolution for us — we think that the female consumer that she’s there, she’s shopping and she’s buying … this is a consumer decision, not really a channel decision,” Plank said. “We believe that there’s a massive opportunity with the consumer that’s walking into those stores and looking for the Under Armour brand and, frankly, they haven’t been able to find it.”

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