Under Armour-Kohl's distribution deal no cause for concern, analysts say

Shares of Under Armour (UA) outperformed the broader market Tuesday after research firm Citi downplayed concerns of brand dilution under the apparel maker's tie-up with Kohl's (KSS). DISTRIBUTION FEARS OVERBLOWN: In a research note highlighted by Barron's, Citi analysts Kate McShane and Corinna Van der Ghinst said that, while Under Armour's distribution agreement with Kohl's has stoked investor concern given its foundation as a premium sports brand, they believe it was always the company's intention to expand outside of the high-end, not unlike Nike's (NKE) diverse distribution strategy. The analysts note that the move will require a wider product range and intensified, disciplined price planning, which Under Armour has already confirmed in saying Kohl's would represent the lower, "good" tier of items. Notably, premium-priced Under Armour innovations like "Infrared" and "CoolSwitch" will not migrate to value outlets and, contrary to bear theses calling the move a response to slowing growth opportunities, company management is positioning the expansion as opening up a new set of consumers and boosting its reach with female shoppers, McShane and Van der Ghinst said. PRICE ACTION: Shares of Under Armour closed up 1.42% to $43.59, while Kohl's gained 1.72% and Nike rose 1.64%. Reference Link