Vous êtes sur la page 1sur 7

Under Armour

Lifestyle Brands and Retailers 

Camilo Lyon | Analyst |  Canaccord Genuity LLC (US) |  CLyon@canaccordgenuity.com |  212.849.3978


US Equity Research Pallav Saini | Associate |  Canaccord Genuity LLC (US) |  psaini@canaccordgenuity.com |  212.389.8054
30 October 2018

SELL Raising Target Price


unchanged
PRICE TARGET US$13.00↑
from US$12.00
Price (30-Oct) US$23.23
Q3 gains come at Q4 expense: maintain SELL
Ticker UAA-NYSE Investment recommendation
UAA reported better than expected results with adj. EPS of 25c beating our consensus
52-Week Range (US$): 11.40 - 24.69 estimate of 12c. Relative to our model, the beat was driven by $33M of stronger sales
Avg Daily Vol (M)  : 4.7
(an earlier than planned shipment of w/s orders and continued sales to the off price
Market Cap  (US$M): 10,478
Shares Out. (M)  : 451.0 channel likely drove the majority of the upside), gross margin expansion of 16bps vs. our
-48bp estimate (+2c), and less SG&A growth due to a $9M push of marketing spend into
FYE Dec 2017A 2018E 2019E Q4 from Q3 which resulted in 422bps of less deleverage (+11c). Inventory was down
Sales  (US$M) 4,982 5,164↑ 5,332↓ 0.6%, a positive sign of the work it has done to right size its business as well as the
Previous - 5,149 5,356 process improvements it is making in supply chain (e.g. SKU count reduction and vendor
P/Sales (x)  2.1 2.0 2.0 consolidation). DTC was down -0.6% due to a pullback in promotions in the factory
EPS  (US$) 0.19 0.21↑ 0.25↑ channel which by our math resulted in store comps down ~7%. By region, NA was -1.6%
Previous - 0.15 0.24 but was helped by the earlier shipments while international slowed to +15%. Full year
P/E (x)  121.1 112.3 91.3
EPS guidance was increased 3c to 19c-22c which includes a 2c tax benefit while net
Quarterly Sales  Q1 Q2 Q3 Q4
revenue of +3%-4% was unchanged as was GM and SG&A. Thus our Q4 EPS estimate is
2017A 1,120 1,088 1,409 1,365
now 3c vs. our prior 11c estimate, which in our view drastically reduces the boost from
2018E 1,185A 1,175A 1,443A 1,361 the Q3 beat.
2019E 1,204 1,196 1,504 1,429 While these results might hint at a forthcoming turn in the business, we believe the
timing shifts on both sales and expenses obfuscate the challenges the company still
Quarterly EPS  Q1 Q2 Q3 Q4
faces. At the heart of it, we have yet to see innovation materialize that would spur a
2017A (0.01) (0.03) 0.22 (0.00)
return to consistent growth in NA. Given the significant amount of off-price sales that
2018E 0.00A (0.08)A 0.25A 0.03
have unfolded this year, next year's return to growth in NA w/s likely does not materialize
2019E 0.02 (0.04) 0.25 0.02
before 2H19. In addition, we are hard pressed to see material growth in its key sporting
26
goods channel before 2020 at earliest. With valuation now 1.83x NTM sales, 77x P/E,
24 and 26.3x EBITDA, and still much to prove on the product front, we maintain our SELL.
22 Bullish points: (1) Raised NA sales growth guidance to -LSD from -L-MSD previously; (2)
20 inventory declined 0.6%; (3) 1/3 less promotional days in NA DTC in 2018 vs. 2017; (4)
18 higher mix of product sold at higher margin beat plan; (5) realizing expense benefits from
16
operational efficiencies earlier than expected.
14
Bearish points: (1) NA declined 1.6% despite an easy comparison (-12.1%); (2)
significant deceleration in international growth sequentially (~3,500bps on a two-year
12
basis); (3) DTC decelerated sequentially by ~1,300bps on a two-year basis; (4) lowered
10 FY guidance for accessories revenue to -MSD from -LSD; (5) $9M in marketing expense
May-18
Nov-17

Dec-17

Aug-18
Mar-18

Sep-18
Feb-18

Apr-18

Oct -18

pushed out to Q4; (6) distributor sales pressured Q3 gross margin by 40bps.
Jun-18
Jan-18

Jul-18

UAA
3c increase in EPS guidance, of which 2c is from lower tax rate: UAA maintained full
S& P 500 (rebased) year revenue guidance of +3%-4%, raising NA to -LSD (from -L-MSD previously) while
Source: Fact Set
lowering international to ~25% from 25%+ previously. Gross margin and SGA guidance
Priced as of close of business 30 October 2018  was maintained. Adj. EBIT is now expected to be $150M-$165M (up from $140-$160M)
Under Armour is a leading manufacturer of athletic and full year tax rate is now expected to be 13%-15% (from 25%-27%). Including 2c
apparel, footwear, and accessories, selling its products benefit from a lower tax rate, adj. EPS is now expected to be 19c-22c, implying Q4 adj.
through wholesalers, factory outlet stores, and online. EPS of 2c-5c vs. 12c consensus heading into Q3 report.
Valuation
Our $13 price target is a blend of 45x our 2019 EPS estimate, 20x EV/EBITDA, and DCF.

Canaccord Genuity is the global capital markets group of Canaccord Genuity Group Inc. (CF : TSX)
The recommendations and opinions expressed in this research report accurately reflect the research analyst's personal, independent and objective views about any and all
the companies and securities that are the subject of this report discussed herein.

For important information, please see the Important Disclosures beginning on page 4 of this document.
Under Armour
Raising Target Price

Mixed Q3 results: Relative to our model, majority of the beat was driven by lower
SG&A growth (+11c) coupled with higher gross margin (+2c) and higher revenue
(+1c). Revenue growth of 2.4% exceeded our +0.3% estimate, with the
outperformance driven by apparel (+4.2% vs. our flat est.) as footwear (flat) was in-
line with our estimate and accessories (-6%) fell short of our +2% est. Growth in
apparel was driven by Armour, Storm and ColdGear Reactor fleece along with
Recovery apparel. Running benefited from strength in HOVR (Phantom, Sonic, CGR,
SLK), Curry 5 and Forge 96. By region, international (+15.1%) was the primary growth
driver as NA declined 1.6%. Gross margin expanded ~16bps (vs. our -48bps est.) as
+70bps benefit from lower product costs and lower promotions was partially offset by
-40bps impact from higher mix of lower margin distributor sales.

Figure 1: UAA Q3 variance chart

Estim ate Actual


Incom e Statem ent 3Q17A 3Q18E 3Q18 Delta EPS Im pact
Revenue
Apparel 939.4 939.4 978.4 39.0
Footw ear 285.1 285.1 284.9 (0.2)
Accessories 123.5 126.0 116.2 (9.8)
Total Net Sales 1,347.9 1,350.4 1,379.5 29.1
Licensing revenues 34.3 32.6 31.4 (1.2)
Total Net Revenue $1,409.0 $1,409.9 $1,443.0 $33.1 $0.01

COGS 756.5 765.6 772.4 6.8


Gross Profit 652.5 644.3 670.6 26.3
SG&A 501.5 572.9 527.6 (45.3)
Operating Incom e 151.0 71.4 143.0 71.6

Other Income, net (1.1) (3.0) (4.3) (1.3) ($0.00)


Pretax Income 140.3 59.8 129.5 69.7
Taxes 40.3 7.2 17.5 10.3
Net Income 100.0 52.6 112.0 59.4
EPS, diluted $0.22 $0.12 $0.25 $0.13 $0.13

Shares outstanding, diluted 448.4 444.6 451.0 6.4 ($0.00)

Margin Analysis
Gross Margin Total 46.3% 45.7% 46.5% 0.77% $0.02
y/y change (bps) (1.16%) (0.48%) 0.16%
SG&A 35.6% 40.6% 36.6% (4.07%) $0.11
leverage/(deleverage) (1.67%) (5.19%) (0.97%)
EBIT Margin 10.72% 5.1% 9.9% 4.84% $0.13
Taxes 28.71% 12.0% 13.5% 1.49% ($0.00)
Net Income 7.10% 3.7% 7.8% 4.03%

Source: Company Reports, Canaccord Genuity Research

2
Sell unchanged Target Price US$13.00 from US$12.00 | 30 October 2018 Lifestyle Brands and Retailers 2
Under Armour
Raising Target Price

Figure 2: UAA projected income statement


December Fiscal
Incom e Statem ent 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18E 1Q19E 2Q19E 3Q19E 4Q19E 2014 2015 2016 2017 2018E 2019E
Revenue
Apparel 715.4 680.7 939.4 951.7 766.3 747.3 978.4 961.2 773.9 754.8 1,017.5 1,009.2 2,291.5 2,801.1 3,229.1 3,287.1 3,453.2 3,555.5
Footw ear 269.7 236.9 285.1 246.2 271.8 271.4 284.9 233.9 277.2 276.8 296.3 243.2 431.0 677.7 1,010.7 1,037.8 1,061.9 1,093.5
Accessories 89.1 122.6 123.5 110.7 92.2 105.9 116.2 107.3 96.8 110.1 120.8 112.7 275.4 346.9 406.6 445.8 421.6 440.5
Total Net Sales 1,074.2 1,040.2 1,347.9 1,308.5 1,130.2 1,124.6 1,379.5 1,302.4 1,147.9 1,141.7 1,434.6 1,365.2 2,997.9 3,825.7 4,646.5 4,770.8 4,936.7 5,089.5
Licensing revenues 24.2 25.1 34.3 32.9 26.3 21.2 31.4 31.3 25.0 23.3 34.5 34.4 67.2 84.2 99.8 116.6 110.2 117.2
Connected Fitness 21.4 23.0 26.8 23.9 28.8 29.1 32.2 27.5 30.8 31.1 34.4 29.4 19.2 53.4 80.4 95.1 117.6 125.8
Intersegment eliminations 0.0 0.0 0.0 0.0 0.0 0.0 (1.4) 0.0 0.0 0.0
Total Net Revenue 1,119.8 1,088.2 1,409.0 1,365.4 1,185.4 1,174.9 1,443.0 1,361.2 1,203.8 1,196.2 1,503.5 1,429.0 3,084.4 3,963.3 4,825.3 4,982.4 5,164.4 5,332.5

COGS 611.9 590.0 756.5 774.2 654.4 642.3 772.4 750.0 650.0 634.0 799.9 783.1 1,572.2 2,057.8 2,584.7 2,732.6 2,819.1 2,867.0
Gross Profit 507.9 498.2 652.5 591.2 530.9 532.6 670.6 611.2 553.7 562.2 703.7 645.9 1,512.2 1,905.5 2,240.6 2,249.9 2,345.3 2,465.5
SG&A 500.4 503.0 501.5 590.8 514.6 552.6 527.6 590.8 530.1 570.3 538.2 620.4 1,158.3 1,497.0 1,823.1 2,095.8 2,185.7 2,258.9
Operating Incom e 7.5 (4.8) 151.0 0.3 16.3 (20.0) 143.0 20.3 23.7 (8.1) 165.5 25.5 354.0 408.5 417.5 154.1 159.6 206.6

Interest expense, net (7.8) (7.8) (9.6) (9.3) (8.6) (8.6) (9.2) (9.6) (9.5) (9.5) (9.5) (9.5) (5.3) (14.6) (26.4) (34.5) (35.9) (38.0)
Other Income, net 2.6 (2.9) (1.1) (2.2) 2.9 (8.1) (4.3) (4.5) (4.0) (4.0) (4.0) (4.0) (6.4) (7.2) (2.8) (3.6) (14.0) (16.0)
Pretax Income 2.3 (15.5) 140.3 (11.2) 10.6 (36.7) 129.5 6.2 10.2 (21.6) 152.0 12.0 342.2 386.7 388.3 115.9 109.7 152.6
Taxes 4.6 (3.2) 40.3 (10.6) 9.8 (2.7) 17.5 (7.5) 2.6 (5.5) 38.4 3.0 134.2 154.1 132.5 31.0 17.2 38.6
Net Income ($2.3) ($12.3) $100.0 ($0.6) $0.8 ($34.0) $112.0 $13.7 $7.6 ($16.1) $113.5 $9.0 $208.0 $232.6 $255.8 $84.9 $92.6 $114.0
EPS, diluted ($0.01) ($0.03) $0.22 ($0.00) $0.00 ($0.08) $0.25 $0.03 $0.02 ($0.04) $0.25 $0.02 $0.48 $0.53 $0.57 $0.19 $0.21 $0.25
Factset Consensus ($0.03) ($0.06) $0.19 $0.00 ($0.05) ($0.08) $0.12 $0.10 $0.04 ($0.03) $0.21 $0.12 $0.49 $0.54 $0.58 $0.19 $0.19 $0.32

Shares outstanding, diluted 439.4 440.4 448.4 441.8 443.1 444.6 451.0 451.0 444.6 444.6 451.0 451.0 436.0 440.9 444.9 442.5 447.4 447.8

Margin Analysis
Gross Margin Total 45.4% 45.8% 46.3% 43.3% 44.8% 45.3% 46.5% 44.9% 46.0% 47.0% 46.8% 45.2% 49.0% 48.1% 46.4% 45.2% 45.4% 46.2%
y/y change (bps) (0.52%) (1.94%) (1.16%) (1.42%) (0.57%) (0.45%) 0.16% 1.60% 1.21% 1.67% 0.33% 0.30% 0.29% (0.95%) (1.65%) (1.28%) 0.26% 0.82%
SG&A 44.7% 46.2% 35.6% 43.3% 43.4% 47.0% 36.6% 43.4% 44.0% 47.7% 35.8% 43.4% 37.6% 37.8% 37.8% 42.1% 42.3% 42.4%
leverage/(deleverage) (2.14%) (0.43%) (1.67%) (11.11%) 1.27% (0.81%) (0.97%) (0.13%) (0.62%) (0.64%) 0.77% (0.01%) (0.18%) (0.22%) (0.01%) (4.28%) (0.26%) (0.04%)
EBIT Margin 0.7% (0.4%) 10.7% 0.0% 1.4% (1.7%) 9.9% 1.5% 2.0% (0.7%) 11.0% 1.8% 11.5% 10.3% 8.7% 3.1% 3.1% 3.9%
Other income 0.2% (0.3%) (0.1%) (0.2%) 0.2% (0.7%) (0.3%) (0.3%) (0.3%) (0.3%) (0.3%) (0.3%) (0.2%) (0.2%) (0.1%) (0.1%) (0.3%) (0.3%)
Taxes 199.4% 20.6% 28.7% 94.8% 92.8% 7.3% 13.5% (120.0%) 25.3% 25.3% 25.3% 25.3% 39.2% 39.9% 34.1% 26.8% 15.6% 25.3%
Net Income (0.2%) (1.1%) 7.1% (0.0%) 0.1% (2.9%) 7.8% 1.0% 0.6% (1.3%) 7.6% 0.6% 6.7% 5.9% 5.3% 1.7% 1.8% 2.1%
Grow th Analysis
Revenue
Apparel 7.3% 11.1% (8.0%) 2.5% 7.1% 9.8% 4.2% 1.0% 1.0% 1.0% 4.0% 5.0% 30.0% 22.2% 15.3% 1.8% 5.1% 3.0%
Footw ear 2.0% (2.4%) 2.2% 9.5% 0.8% 14.5% (0.1%) (5.0%) 2.0% 2.0% 4.0% 4.0% 44.2% 57.3% 49.1% 2.7% 2.3% 3.0%
Accessories 11.8% 21.7% 1.4% 6.1% 3.4% (13.6%) (5.9%) (3.0%) 5.0% 4.0% 4.0% 5.0% 27.4% 26.0% 17.2% 9.6% (5.4%) 4.5%
Total Net Sales 6.3% 8.8% (5.2%) 4.0% 5.2% 8.1% 2.3% (0.5%) 1.6% 1.5% 4.0% 4.8% 31.7% 27.6% 21.5% 2.7% 3.5% 3.1%
Licensing revenues 24.6% 19.5% 16.4% 10.1% 8.8% (15.7%) (8.6%) (5.0%) (5.0%) 10.0% 10.0% 10.0% 22.3% 25.3% 18.6% 16.8% (5.5%) 6.4%
Connected Fitness 15.9% (2.2%) 32.6% 30.8% 34.4% 26.7% 20.2% 15.0% 7.0% 7.0% 7.0% 7.0% - 177.8% 50.6% 18.2% 23.7% 7.0%
Total Net Revenue 6.9% 8.7% (4.3%) 4.6% 5.9% 8.0% 2.4% (0.3%) 1.6% 1.8% 4.2% 5.0% 32.3% 28.5% 21.8% 3.3% 3.7% 3.3%
Gross Profit Dollars 5.7% 4.3% (6.6%) 1.3% 4.5% 6.9% 2.8% 3.4% 4.3% 5.6% 4.9% 5.7% 33.0% 26.0% 17.6% 0.4% 4.2% 5.1%
Gross Profit Dollars ex-licensing revs 4.9% 3.6% (7.6%) 0.8% 4.3% 8.1% 3.4% 3.9% 4.8% 5.4% 4.7% 5.5% 33.6% 26.0% 17.5% (0.3%) 4.8% 5.1%
SG&A 12.3% 9.8% 0.4% 40.7% 2.8% 9.9% 5.2% 0.0% 3.0% 3.2% 2.0% 5.0% 32.9% 29.2% 21.8% 15.0% 4.3% 3.3%
EBIT (78.4%) (124.7%) (24.2%) (99.8%) 116.2% 318.7% (5.3%) 5810.6% 45.2% (59.5%) 15.7% 25.6% 33.5% 15.4% 2.2% (63.1%) 3.6% 29.5%
Net Income (111.8%) (294.0%) (22.0%) (100.6%) (133.8%) 176.0% 12.0% (2468.2%) 888.6% (52.5%) 1.3% (34.4%) 30.1% 11.8% 10.0% (66.8%) 9.0% 23.1%
EPS (112.0%) (295.1%) (22.4%) (100.6%) (133.5%) 173.4% 11.4% (2419.8%) 885.1% (52.5%) 1.3% (34.4%) 27.9% 10.5% 9.0% (66.6%) 7.8% 23.0%
Source: Company Reports, Canaccord Genuity Research; A more detailed financial model, including balance sheet, income statement, and cash flow projections, if available, may be obtained by contacting your Canaccord Genuity Sales Person or the Authoring Analyst, whose contact
information appears on the front page of this report.

2
Sell unchanged Target Price US$13.00 from US$12.00 | 30 October 2018 Lifestyle Brands and Retailers 3
Under Armour
Raising Target Price

Appendix: Important Disclosures


Analyst Certification
Each authoring analyst of Canaccord Genuity whose name appears on the front page of this research hereby certifies that (i) the
recommendations and opinions expressed in this research accurately reflect the authoring analyst’s personal, independent and
objective views about any and all of the designated investments or relevant issuers discussed herein that are within such authoring
analyst’s coverage universe and (ii) no part of the authoring analyst’s compensation was, is, or will be, directly or indirectly, related to the
specific recommendations or views expressed by the authoring analyst in the research.
Analysts employed outside the US are not registered as research analysts with FINRA. These analysts may not be associated persons of
Canaccord Genuity LLC and therefore may not be subject to the FINRA Rule 2241 and NYSE Rule 472 restrictions on communications
with a subject company, public appearances and trading securities held by a research analyst account.
Sector Coverage
Individuals identified as “Sector Coverage” cover a subject company’s industry in the identified jurisdiction, but are not authoring
analysts of the report.

Investment Recommendation
Date and time of first dissemination: October 30, 2018, 23:04 ET
Date and time of production: October 30, 2018, 19:29 ET
Target Price / Valuation Methodology:
Under Armour - UAA
Our $13 price target is a blend of 45x our 2019 EPS estimate, 20x EV/EBITDA, and DCF.
Risks to achieving Target Price / Valuation:
Under Armour - UAA
Principal risks to our SELL thesis include: 1) sales materially improve faster than we are anticipating in 2018, which would reduce the
expense deleverage we are modeling. Accelerated innovation could drive faster-than-anticipated sales growth; 2) the company reduces
its fixed expenses faster than we anticipate next year, thus protecting margins to a greater degree; 3) a take-out offer is made by a
strategic or financial buyer.

Distribution of Ratings:
Global Stock Ratings (as of 10/30/18)
Rating Coverage Universe IB Clients
# % %
Buy 557 63.22% 46.50%
Hold 203 23.04% 30.05%
Sell 13 1.48% 23.08%
Speculative Buy 108 12.26% 63.89%
881* 100.0%
*Total includes stocks that are Under Review

Canaccord Genuity Ratings System


BUY: The stock is expected to generate risk-adjusted returns of over 10% during the next 12 months.
HOLD: The stock is expected to generate risk-adjusted returns of 0-10% during the next 12 months.
SELL: The stock is expected to generate negative risk-adjusted returns during the next 12 months.
NOT RATED: Canaccord Genuity does not provide research coverage of the relevant issuer.
“Risk-adjusted return” refers to the expected return in relation to the amount of risk associated with the designated investment or the
relevant issuer.
Risk Qualifier
SPECULATIVE: Stocks bear significantly higher risk that typically cannot be valued by normal fundamental criteria. Investments in the
stock may result in material loss.
12-Month Recommendation History (as of date same as the Global Stock Ratings table)

Sell unchanged Target Price US$13.00 from US$12.00 | 30 October 2018 Lifestyle Brands and Retailers 4
Under Armour
Raising Target Price

A list of all the recommendations on any issuer under coverage that was disseminated during the preceding 12-month period
may be obtained at the following website (provided as a hyperlink if this report is being read electronically) http://disclosures-
mar.canaccordgenuity.com/EN/Pages/default.aspx

Required Company-Specific Disclosures (as of date of this publication)


Canaccord Genuity or one or more of its affiliated companies is a market maker or liquidity provider in the securities of Under Armour or
in any related derivatives.
Canaccord Genuity or one or more of its affiliated companies intend to seek or expect to receive compensation for Investment Banking
services from Under Armour in the next three months.
An analyst has visited the material operations of Under Armour. No payment was received for the related travel costs.

Under Armour Rating History as of 10/29/2018


B:$130.00 B:$65.00 B:$44.00 H:$20.00 H:$21.00 H:$18.00 H:$15.00 S:$8.00 S:$9.00 S:$11.00 S:$12.00
10/14/2015 04/18/2016 10/25/2016 01/31/2017 04/27/2017 08/01/2017 10/12/2017 11/01/2017 03/16/2018 07/26/2018 09/20/2018

$140
$120
$100
$80
$60
$40
$20
$0
Jan 14 Apr 14 Jul 14 Oct 14 Jan 15 Apr 15 Jul 15 Oct 15 Jan 16 Apr 16 Jul 16 Oct 16 Jan 17 Apr 17 Jul 17 Oct 17 Jan 18 Apr 18 Jul 18 Oct 18

Closing Price Price Target

Buy (B); Speculative Buy (SB); Sell (S); Hold (H); Suspended (SU); Under Review (UR); Restricted (RE); Not Rated (NR)

Past performance
In line with Article 44(4)(b), MiFID II Delegated Regulation, we disclose price performance for the preceding five years or the whole period
for which the financial instrument has been offered or investment service provided where less than five years. Please note price history
refers to actual past performance, and that past performance is not a reliable indicator of future price and/or performance.
Online Disclosures
Up-to-date disclosures may be obtained at the following website (provided as a hyperlink if this report is being read electronically)
http://disclosures.canaccordgenuity.com/EN/Pages/default.aspx; or by sending a request to Canaccord Genuity Corp. Research, Attn:
Disclosures, P.O. Box 10337 Pacific Centre, 2200-609 Granville Street, Vancouver, BC, Canada V7Y 1H2; or by sending a request
by email to disclosures@canaccordgenuity.com. The reader may also obtain a copy of Canaccord Genuity’s policies and procedures
regarding the dissemination of research by following the steps outlined above.
General Disclaimers
See “Required Company-Specific Disclosures” above for any of the following disclosures required as to companies referred to in this
report: manager or co-manager roles; 1% or other ownership; compensation for certain services; types of client relationships; research
analyst conflicts; managed/co-managed public offerings in prior periods; directorships; market making in equity securities and related
derivatives. For reports identified above as compendium reports, the foregoing required company-specific disclosures can be found in
a hyperlink located in the section labeled, “Compendium Reports.” “Canaccord Genuity” is the business name used by certain wholly
owned subsidiaries of Canaccord Genuity Group Inc., including Canaccord Genuity LLC, Canaccord Genuity Limited, Canaccord Genuity
Corp., and Canaccord Genuity (Australia) Limited, an affiliated company that is 50%-owned by Canaccord Genuity Group Inc.
The authoring analysts who are responsible for the preparation of this research are employed by Canaccord Genuity Corp. a Canadian
broker-dealer with principal offices located in Vancouver, Calgary, Toronto, Montreal, or Canaccord Genuity LLC, a US broker-dealer
with principal offices located in New York, Boston, San Francisco and Houston, or Canaccord Genuity Limited., a UK broker-dealer with
principal offices located in London (UK) and Dublin (Ireland), or Canaccord Genuity (Australia) Limited, an Australian broker-dealer with
principal offices located in Sydney and Melbourne.
The authoring analysts who are responsible for the preparation of this research have received (or will receive) compensation based upon
(among other factors) the Investment Banking revenues and general profits of Canaccord Genuity. However, such authoring analysts
have not received, and will not receive, compensation that is directly based upon or linked to one or more specific Investment Banking
activities, or to recommendations contained in the research.
Some regulators require that a firm must establish, implement and make available a policy for managing conflicts of interest arising as
a result of publication or distribution of research. This research has been prepared in accordance with Canaccord Genuity’s policy on
managing conflicts of interest, and information barriers or firewalls have been used where appropriate. Canaccord Genuity’s policy is
available upon request.

Sell unchanged Target Price US$13.00 from US$12.00 | 30 October 2018 Lifestyle Brands and Retailers 5
Under Armour
Raising Target Price

The information contained in this research has been compiled by Canaccord Genuity from sources believed to be reliable, but (with the
exception of the information about Canaccord Genuity) no representation or warranty, express or implied, is made by Canaccord Genuity,
its affiliated companies or any other person as to its fairness, accuracy, completeness or correctness. Canaccord Genuity has not
independently verified the facts, assumptions, and estimates contained herein. All estimates, opinions and other information contained
in this research constitute Canaccord Genuity’s judgement as of the date of this research, are subject to change without notice and are
provided in good faith but without legal responsibility or liability.
From time to time, Canaccord Genuity salespeople, traders, and other professionals provide oral or written market commentary or
trading strategies to our clients and our principal trading desk that reflect opinions that are contrary to the opinions expressed in this
research. Canaccord Genuity’s affiliates, principal trading desk, and investing businesses also from time to time make investment
decisions that are inconsistent with the recommendations or views expressed in this research.
This research is provided for information purposes only and does not constitute an offer or solicitation to buy or sell any designated
investments discussed herein in any jurisdiction where such offer or solicitation would be prohibited. As a result, the designated
investments discussed in this research may not be eligible for sale in some jurisdictions. This research is not, and under no
circumstances should be construed as, a solicitation to act as a securities broker or dealer in any jurisdiction by any person or company
that is not legally permitted to carry on the business of a securities broker or dealer in that jurisdiction. This material is prepared for
general circulation to clients and does not have regard to the investment objectives, financial situation or particular needs of any
particular person. Investors should obtain advice based on their own individual circumstances before making an investment decision.
To the fullest extent permitted by law, none of Canaccord Genuity, its affiliated companies or any other person accepts any liability
whatsoever for any direct or consequential loss arising from or relating to any use of the information contained in this research.
Research Distribution Policy
Canaccord Genuity research is posted on the Canaccord Genuity Research Portal and will be available simultaneously for access by all
of Canaccord Genuity’s customers who are entitled to receive the firm's research. In addition research may be distributed by the firm’s
sales and trading personnel via email, instant message or other electronic means. Customers entitled to receive research may also
receive it via third party vendors. Until such time as research is made available to Canaccord Genuity’s customers as described above,
Authoring Analysts will not discuss the contents of their research with Sales and Trading or Investment Banking employees without prior
compliance consent.
For further information about the proprietary model(s) associated with the covered issuer(s) in this research report, clients should
contact their local sales representative.
Short-Term Trade Ideas
Research Analysts may, from time to time, discuss “short-term trade ideas” in research reports. A short-term trade idea offers a near-
term view on how a security may trade, based on market and trading events or catalysts, and the resulting trading opportunity that may
be available. Any such trading strategies are distinct from and do not affect the analysts' fundamental equity rating for such stocks. A
short-term trade idea may differ from the price targets and recommendations in our published research reports that reflect the research
analyst's views of the longer-term (i.e. one-year or greater) prospects of the subject company, as a result of the differing time horizons,
methodologies and/or other factors. It is possible, for example, that a subject company's common equity that is considered a long-
term ‘Hold' or 'Sell' might present a short-term buying opportunity as a result of temporary selling pressure in the market or for other
reasons described in the research report; conversely, a subject company's stock rated a long-term 'Buy' or “Speculative Buy’ could be
considered susceptible to a downward price correction, or other factors may exist that lead the research analyst to suggest a sale over
the short-term. Short-term trade ideas are not ratings, nor are they part of any ratings system, and the firm does not intend, and does not
undertake any obligation, to maintain or update short-term trade ideas. Short-term trade ideas are not suitable for all investors and are
not tailored to individual investor circumstances and objectives, and investors should make their own independent decisions regarding
any securities or strategies discussed herein. Please contact your salesperson for more information regarding Canaccord Genuity’s
research.
For Canadian Residents:
This research has been approved by Canaccord Genuity Corp., which accepts sole responsibility for this research and its dissemination
in Canada. Canaccord Genuity Corp. is registered and regulated by the Investment Industry Regulatory Organization of Canada (IIROC)
and is a Member of the Canadian Investor Protection Fund. Canadian clients wishing to effect transactions in any designated investment
discussed should do so through a qualified salesperson of Canaccord Genuity Corp. in their particular province or territory.
For United States Persons:
Canaccord Genuity LLC, a US registered broker-dealer, accepts responsibility for this research and its dissemination in the United States.
This research is intended for distribution in the United States only to certain US institutional investors. US clients wishing to effect
transactions in any designated investment discussed should do so through a qualified salesperson of Canaccord Genuity LLC. Analysts
employed outside the US, as specifically indicated elsewhere in this report, are not registered as research analysts with FINRA. These
analysts may not be associated persons of Canaccord Genuity LLC and therefore may not be subject to the FINRA Rule 2241 and NYSE
Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst
account.
For United Kingdom and European Residents:

Sell unchanged Target Price US$13.00 from US$12.00 | 30 October 2018 Lifestyle Brands and Retailers 6
Under Armour
Raising Target Price

This research is distributed in the United Kingdom and elsewhere Europe, as third party research by Canaccord Genuity Limited,
which is authorized and regulated by the Financial Conduct Authority. This research is for distribution only to persons who are Eligible
Counterparties or Professional Clients only and is exempt from the general restrictions in section 21 of the Financial Services and
Markets Act 2000 on the communication of invitations or inducements to engage in investment activity on the grounds that it is being
distributed in the United Kingdom only to persons of a kind described in Article 19(5) (Investment Professionals) and 49(2) (High Net
Worth companies, unincorporated associations etc) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005
(as amended). It is not intended to be distributed or passed on, directly or indirectly, to any other class of persons. This material is not for
distribution in the United Kingdom or elsewhere in Europe to retail clients, as defined under the rules of the Financial Conduct Authority.
For Jersey, Guernsey and Isle of Man Residents:
This research is sent to you by Canaccord Genuity Wealth (International) Limited (CGWI) for information purposes and is not to be
construed as a solicitation or an offer to purchase or sell investments or related financial instruments. This research has been produced
by an affiliate of CGWI for circulation to its institutional clients and also CGWI. Its contents have been approved by CGWI and we are
providing it to you on the basis that we believe it to be of interest to you. This statement should be read in conjunction with your client
agreement, CGWI's current terms of business and the other disclosures and disclaimers contained within this research. If you are in any
doubt, you should consult your financial adviser.
CGWI is licensed and regulated by the Guernsey Financial Services Commission, the Jersey Financial Services Commission and the Isle
of Man Financial Supervision Commission. CGWI is registered in Guernsey and is a wholly owned subsidiary of Canaccord Genuity Group
Inc.
For Australian Residents:
This research is distributed in Australia by Canaccord Genuity (Australia) Limited ABN 19 075 071 466 holder of AFS Licence No
234666. To the extent that this research contains any advice, this is limited to general advice only. Recipients should take into account
their own personal circumstances before making an investment decision. Clients wishing to effect any transactions in any financial
products discussed in the research should do so through a qualified representative of Canaccord Genuity (Australia) Limited. Canaccord
Genuity Wealth Management is a division of Canaccord Genuity (Australia) Limited.
For Hong Kong Residents:
This research is distributed in Hong Kong by Canaccord Genuity (Hong Kong) Limited which is licensed by the Securities and Futures
Commission. This research is only intended for persons who fall within the definition of professional investor as defined in the Securities
and Futures Ordinance. It is not intended to be distributed or passed on, directly or indirectly, to any other class of persons. Recipients of
this report can contact Canaccord Genuity (Hong Kong) Limited. (Contact Tel: +852 3919 2561) in respect of any matters arising from, or
in connection with, this research.
Additional information is available on request.
Copyright © Canaccord Genuity Corp. 2018 – Member IIROC/Canadian Investor Protection Fund
Copyright © Canaccord Genuity Limited. 2018 – Member LSE, authorized and regulated by the Financial Conduct Authority.
Copyright © Canaccord Genuity LLC 2018 – Member FINRA/SIPC
Copyright © Canaccord Genuity (Australia) Limited. 2018 – Participant of ASX Group, Chi-x Australia and of the NSX. Authorized and
regulated by ASIC.
All rights reserved. All material presented in this document, unless specifically indicated otherwise, is under copyright to Canaccord
Genuity Corp., Canaccord Genuity Limited, Canaccord Genuity LLC or Canaccord Genuity Group Inc. None of the material, nor its
content, nor any copy of it, may be altered in any way, or transmitted to or distributed to any other party, without the prior express written
permission of the entities listed above.
None of the material, nor its content, nor any copy of it, may be altered in any way, reproduced, or distributed to any other party
including by way of any form of social media, without the prior express written permission of the entities listed above.

Sell unchanged Target Price US$13.00 from US$12.00 | 30 October 2018 Lifestyle Brands and Retailers 7