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Under Armour (UA) Inks 10-Year Contract with UW-Madison

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Under Armour, Inc.UA has signed a ten-year deal with the University of Wisconsin-Madison. As per the deal - valued at more than $100 million according to media reports - Under Armour will become the university's official outfitter from Jul 1, 2016.

The deal requires Under Armour to design and supply apparel, footwear and accessories for training as well as to provide game uniforms for all 23 teams of the university. The Baltimore-based company will take over the Badgers once its contract expires with Adidas on Jun 1.

Investors are very impressed with the company's efforts to drive growth as evident from its rising share price, which has gained more than 50% this year.

Recently, the company stated that it is targeting net revenues of $7.5 billion by 2018, which indicates compounded yearly growth rate of 25% from its 2014 net revenues of $3.1 billion. The company is also aiming to increase its operating income to $800 million by 2018 from the 2014 figure of $354 million, demonstrating 23% compounded annual growth. These figures include contribution from Connected Fitness, which Under Armour acquired in 2015. To achieve its long-term growth target the company will increase its spending by 8% to 10% of net revenue per annum.

Furthermore, Under Armour continues to seek opportunities to increase its global footprint and market share. Though the company generates major portion of its revenue from North America, it intends to expand business operations to other parts of the world to mitigate the risks stemming from concentration in one geographic region.

The company has also extended its partnership with basketball star Stephen Curry till 2024, which will help in enhancing brand recognition and to get an edge over its competitors. Taken together, these strategies will not only help in gaining market share but also provide the company a competitive platform in the global sportswear retail market.

Zacks Rank

The company currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in this sector include Columbia Sportswear Company COLM , Guess' Inc. GES and Perry Ellis International Inc. PERY . All these stocks sport a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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