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What's going on?
Shares of Under Armour jumped almost 10% on Friday after a Wall Street research firm recommended buying the stock the latest rustle of jingle bells for retailers stock prices this holiday season.
What does this mean?
The carnage in retail in recent years has been well publicized, as consumer spending habits move away from the mall and onto the web. Under Armour was, for a while, an exception. It rode the great athleisure wave, belegging the limbs of a thousand college lecture halls and partnering with star athletes like Stephen Curry to drive sales momentum. But thats unraveled in the past 18 months, as competition in the space has heated up and Under Armours sales growth has stalled. Its focused on cutting its costs and has hired a raft of new senior executives with the aim of boosting its profitability in 2018.
Why should I care?
The bigger picture: Traditional retailers are loving this holiday season.
Shares of retail stocks have performed much better than stocks overall since Thanksgiving. The festive cheer is probably partly down to a stronger US economy which should result in more holiday sales than last year. But its also due to tax cuts: US retailers earn most of their revenue within the US, and are thus set to benefit if the proposed new lower corporate tax rate is passed into law (which seems likely).
For markets: Under Armour isnt out of the woods yet.
Stiff competition in the athleisure space overall remains a reality and its getting even more competitive, as Amazon stealthily launches its own private-label sportswear (tweet this). Perhaps the best news for Under Armour is that its stock price has been hit hard already: the companys value has plunged almost 80% in the past two years, and so the stock price now already reflects many of the challenges that it faces.
Originally posted as part of the Finimize daily email.
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