Analyst Thoughts On Kohl's Partnership With Under Armour

Kohl's Corporation KSS will begin selling Under Armour Inc UA products next spring. According to Jonathan Komp of Baird, the relationship between the two is expected to be a win-win and will allow Under Armour to better serve an untapped customer base with a differentiated product assortment.

According to Komp, Kohl's is "excited" given the fact that the relationship marks the largest brand launch in the department store's history. The company will be making a major commitment to invest around $50 million in store fixtures, create a strong brand presence and allocate greater shelf space for the athleisurewear space. Moreover, Under Armour's products will be featured across men's women's, kid's, footwear and home categories.

Related Link: Kohl's Strikes New Alliance With Under Armour To Boost its Active Business

Komp continued that Under Armour's mix of merchandise purchases at Dicks Sporting Goods Inc DKS (12 percent last year) is "roughly" 60 percent of that for Nike Inc NKE. Assuming a similar profile with Kohl's over time implies a $500 million–$600 million opportunity for annual retail sales for Under Armour.

Adjusting for wholesale-equivalent terms implies a $300 million-plus sales potential for Under Armour, which represents approximately 6 percent of its total current global sales.

Finally, Komp pointed out that he is "encouraged" by the fact that he was expecting an initial launch at just 600 stores rather than a launch at every store.

Shares of Under Armour are Outperform rated with a $55 price target.

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