There has been some debate on Seeking Alpha about Under Armour (NYSE:UA)(NYSE:UA.C) and whether or not they should pursue Lululemon (NASDAQ:LULU) via a buyout. First we had Dana Blankenhorn make the case that Under Armour needed Lululemon in order to expand it's brand and grow revenue in the absence of Sports Authority. In response to that article Economics Based Investor made a strong case that UA doesn't need LULU and the companies are too different to mesh well. I tend to agree with Economics Based Investor here. Kevin Plank, the founder and CEO of Under Armour, started the company because he couldn't buy what he wanted so he made it himself. I don't see him going out and buying a company when his own company can make a better product. Under Armour is now pursuing Lululemon, just not in the way that has been discussed lately.
In the beginning of June it was revealed that Under Armour hired fashion designer Tim Coppens to design a new clothing line that will be called Under Armour Sportswear, or UAS. Mr. Coppens is a high-end fashion designer, and the current offerings from UA are anything but high-end with prices on the low end compared to competitors such as Nike (NYSE:NKE) and LULU. Investors in Under Armour have long been worried about that pricing and the effects on margins as well as the lack of growth into the female area of the market.
