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Under Armour is attracting older customers while teens prefer Nike and Vans

The latest report from B. Riley suggests that Under Armour is losing favor with younger shoppers, but gaining with older ones. Read More...

Under Armour Inc. is gaining favor with an older crowd of shoppers, according to the most recent athletic survey from B. Riley.

“We would note that Under Armour remained flat in the younger ages of 18-to-34 whereas Adidas, Lululemon and Nike all increased, indicating older consumers are gravitating more towards Under Armour, which is likely representative of the increased mass distribution,” wrote B. Riley in its report.

In shoes, Under Armour UA, +3.26% UAA, +3.09%  lost ground in the basketball category, falling from fourth in 2018 to fifth this year, behind Reebok. It fell to number seven from six in the casual category.

See: Vans will be a brand leader for V.F. Corp. after jeans spin-off: analysts

In the running category, Under Armour maintained its place at number six.

Nike Inc. NKE, +0.71%   and Adidas AG ADS, +0.96%   held on to their positions at numbers one and two, respectively, across all three of those categories. Reebok is part of the Adidas portfolio.

“We believe this is reflective of the limited innovation we have seen in Under Armour footwear compared to Nike and Adidas,” B. Riley said. “We believe Nike’s innovation engine is just ramping up as they have already announced an entirely new running platform for 2019, as well as further rollout of the adaptive technology beyond basketball. Comparatively, from Under Armour, we are seeing more limited innovation as the company has announced further iterations of the HOVR technology introduced last year.”

In that casual/lifestyle category, there’s been an emergence of brands like New Balance, Vans, a V.F. Corp. VFC, +0.74%   brand, and Puma SE PUM, +0.47%  , with B. Riley channel checks showing that Foot Locker Inc. FL, +0.21%   has increased the amount of space dedicated to the category.

At Dicks Sporting Goods Inc. DKS, +1.50%  , however, the amount of space allotted for Under Armour shrank.

“Dick’s took racks away from Under Armour men’s (-22% year-over-year) and gave space to Reebok, which will likely be devoted to Dick’s private label eventually,” B. Riley wrote, adding that the amount of space for women’s and kids has also fallen.

Read: Levi Strauss ‘challenged by $1 billion in debt, analysts say

“We also noticed fewer Under Armour running shoes, which were replaced by Asics, Brooks, and New Balance,” the report said.

Nike and Adidas also took the top two spots in apparel, with Under Armour at number three. Under Armour was nearly flat year-over-year while Nike, Adidas and Lululemon Athletica Inc. LULU, -0.04%   gained in clothes.

Nike’s dominance extends to the outdoor category. Stifel’s Outdoor Apparel Consumer Survey ranks Nike first for “primary” outdoor apparel brands, followed by Columbia Sportswear Co. COLM, +0.62%  , The North Face, another V.F. Corp. brand, and Under Armour.

In this case, mass distribution helped Under Armour.

“These brands benefit from distribution reach and depth of assortment in comparison to niche and activity-focused brands,” Stifel analysts led by Jim Duffy wrote.

Analysts have expressed concern about damage to the Under Armour brand from off-price selling. In the most recent quarter, the brand took steps to bring down inventory levels.

Stifel said Under Armour’s popularity in outdoor apparel was strongest among Gen Z and suburban shoppers in the Midwest and Northeast.

Don’t miss: Nike doesn’t own the market, insists this brand of handmade Italian sneakers and other niche rivals

However, the Piper Jaffray 37th Semi-Annual Taking Stock with Teens Survey, Under Armour was nowhere to be found among the top choices in clothing or footwear. For both categories, once again, Nike was the top choice. For footwear, Vans and Adidas came in second and third.

“Athletic brands dominate teen preference with Nike and Vans as top two footwear brands,” the report said. “Lululemon hits all-time survey high.”

For clothing, American Eagle Outfitters Inc. AEO, +1.80%   and Adidas came in at two and three.

According to recent data from market intelligence firm Numerator, Gen Z represents as much as $143 billion in spending power, with up to 4 million members of this demographic entering adulthood each year.

On March 18, Under Armour named Kasey Jarvis the company’s new chief design officer. The appointment highlights what Canaccord Genuity sees as a deficiency at the company, which could be hurting Under Armour in all of these surveys.

“A change in design leadership is a clear acknowledgement that Under Armour’s creative output was sorely lacking and needed repositioning,” analysts wrote in a March 19 note. “This has been our contention all along and a central point underpinning our sell rating.”

Canaccord doesn’t expect Jarvis to make an impact for at least two years.

“Taking it together, we believe the task in front of Mr. Jarvis of igniting Under Armour’s product portfolio will require nothing short of Herculean effort, one that could prove lengthy, disruptive and costly,” Canaccord wrote.

Under Armour stock closed up 3% on Wednesday, and has rallied nearly 21% in 2019. The S&P 500 index SPX, +0.35%   has gained 15.2% for the year to date.

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