Which Athletic Apparel Company Is In Better Shape: Under Armour Or Lululemon?

Lululemon Athletica Inc. (NASDAQ: LULU) and Under Armour (NYSE: UA) are two of the fastest-growing companies in the apparel industry. A key similarity between the two companies is the way that they have been able to carve out a niche for themselves in the growing Athleisure market. Effective marketing strategies and innovative products have helped these companies outperform the broader apparel industry over the last couple of years. Trefis captures trends in key operating metrics for Lululemon vs. Under Armour in an interactive dashboard. While Under Armour is the bigger company, Lululemon is growing at twice the rate.

Under Armour’s revenues exceed Lululemon’s by 50%, but Lululemon has reported stronger revenue growth over recent years

• Under Armour is considerably bigger than Lululemon. Under Armour’s total revenue in 2018 stood at $5.2 billion – almost 1.5 times more than Lululemon’s $3.2 billion.
• However, both companies have added roughly $1.3 billion to total revenues since 2015. While this represents an average annual growth rate of 9.4% for Under Armour, the growth rate is considerably higher at 17% for Lululemon.
• This strong growth for both companies has been primarily led by their women’s apparel business. The companies have continued to introduce new fabric, colors, styles and prints that have allowed them to retain and attract customers.
• Moreover, both companies changed their strategies in a timely manner to accommodate a variety of activewear products in their offerings.

Under Armour’s revenue growth since 2015 has averaged around 9%, as opposed to growth of almost 17% for Lululemon

• Despite, Under Armour and Lululemon adding a similar amount to their top lines, Lululemon’s growth has come at a much faster rate than Under Armour.
• Under Armour’s growth has been led by its footwear business while Lululemon has continued to benefit from higher sales for its apparel products – particularly yoga-related products.
• Notably, both companies have continued to outperform the industry. Athleisure has continued to be a strong driver for these companies, led by higher demand for clothing that can be worn to the gym as well as casually. Acceptance of casual dressing at the workplace has also been a factor spurring its growth.

Comparing Store (Retail) Revenues:

• As of 2018, Under Armour’s retail revenue of $3.1 billion was 1.5x than that of Lululemon’s $2.1 billion.
• Contribution of retail segment to Under Armour’s total revenue was 61% while Lululemon’s retail business was contributing roughly 65% to total revenues.
• While Under Armour retail has added $510 million to total revenues since 2015 (growing at an average annual rate of 6.1%), Lululemon’s retail segment has added over $600 million (at an average rate of 12%). Lululemon’s retail business seems to be growing at 2x to that of Under Armour’s

Comparing Direct To Consumer (E-commerce) Revenues

• Under Armour’s DTC segment has added $620 million to total revenues since 2015, growing at an average annual rate of 15% while Lululemon’s DTC segment added over $450 million at an average rate of 29%.
• This growth has been the result of increased traffic on e-commerce websites, improved conversion rates, and increased dollar value per transaction. Moreover for Under Armour, opening up of new brand and factory house stores have also aided growth in this segment.

Under Armour Also Enjoys Higher Revenue Per Store Compared To Lululemon

• Under Armour has enjoyed a much higher average revenue per store as compared to Lululemon over the years.
• Additional details about the number of stores for Under Armour and Lululemon as well as trends in their average revenue per store are available in our interactive dashboard.

It must be mentioned here, though, that Under Armour’s revenue per store includes revenue from retail stores as well as the DTC segment while for Lululemon only retail store revenue is included

We also capture how Lululemon fares against Under Armour in terms of profitability and other key metrics like market capitalization and P/E Ratio in our interactive dashboard.

Conclusion: Under Armour May Be Bigger But Lululemon Is Growing At 2x The Rate

• Under Armour has a larger scale but Lululemon is growing at almost double the rate
• Although both companies have added a similar amount of revenues over the past few years, Lululemon’s growth has come at a much higher pace.
• Moreover, Lululemon is highly profitable while Under Armour is generating losses due to its ongoing restructuring.
• Additionally, Lululemon enjoys a first-mover’s advantage in the high-end yoga apparel and athleisure apparel market while Under Armour has been trying to play catch-up.
• As of now, Lululemon is galloping and it would be tough for Under Armour to generate growth comparable to that of Lululemon.

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