Under Armour will plant its flag at "the corner of Main and Main," when it opens a Manhattan store in three years in the former flagship FAO Schwarz space on Fifth Avenue, Kevin Plank, the athletic apparel maker's founder, announced Tuesday.
By opening an Under Armour Brand House in the iconic toy retailer's former location, the Baltimore-based firm is "putting the world on notice," said Plank, Under Armour's chairman and CEO.
"We're really going to be able to define ourselves as the company that we expect to be," he said. "Our plan is to build the most breathtaking and exciting consumer experience ever conceived at retail."
Plank shared the plans to rent the space next door to Apple's equally iconic New York store as Under Armour released its second quarter earnings, which were depressed by the loss of Sports Authority, a key retail outlet that is closing all its stores in bankruptcy, and a settlement with shareholders over the creation of a class of non-voting stock.
Under Armour reported a loss of $52.6 million for the April-to-June quarter, compared to a $14.8 million profit in the same period last year.
Shares of Under Armour fell 5.1 percent Tuesday to close at $41.36 per share.
While the earnings disappointed, the brand reported that sales continued to soar, rising 28 percent to $1.0 billion from $783 million a year earlier.
Under Armour's per share earnings were complicated because the company paid a $59 million stock dividend to holders of its newly created Class C shares to settle a lawsuit over the creation of the non-voting class. As a result it reported a loss of 12 cents per share for its Class A and Class B shares and earnings of 15 cents per share for Class C shares.
In addition to the settlement, Under Armour took a one-time $23 million charge related to Sports Authority's closing.
But Plank also announced during a conference call with analysts that Under Armour has already taken steps to make up for the lost sales from the sporting goods retailer. Eager to reach more women, Under Armour will begin selling its apparel and footwear next year in about 600 Kohl's department stores.
It's unclear how the addition of Kohl's will affect sales initially, but "longer-term, [Under Armour] has solid growth opportunities, like Kohl's, China, and initiatives like the new 5th Ave flagship," Michael Binetti, a managing director at UBS Investment Bank, wrote in a report.
UBS Investment Bank maintained a "neutral" rating on Under Armour's stock.
Another analyst cut his price target for Under Armour's stock to $45 from $52 a share, after the company reduced its projected sales growth this year to 24 percent from 26 percent. Tuna Amobi, an equity analyst at S&P Global Market Intelligence, also reduced his earnings estimates for this year by 9 cents per share and next year by 6 cents.
Within product categories, Under Armour saw its strongest growth in footwear, where sales climbed 58 percent to $243 million as consumers bought from multiple lines including the Stephen Curry signature basketball shoes as well as running and cleated shoes.
In apparel, the brand's biggest category, the 19 percent sales growth was driven by strength in men's and women's training gear and golf clothing.
International sales represented 15 percent of total sales but grew 68 percent compared with the second quarter of 2015. The brand has opened 60 new international Under Armour stores this year.
Selling and other administrative costs were up 32 percent to $458 million because of the Sports Authority liquidation and bigger investments in Under Armour's branded stores and websites and a workforce expansion.
Plank told analysts that the partnership with Kohl's was in the works prior to the collapse of Sports Authority.
"There's nothing reactionary," he said. "It's a proactive move. Kohl's is a great evolution for us. ... We believe there's a massive opportunity with the consumer walking into those stores and looking for the Under Armour brand and haven't been able to find it."
It's part of a strategy to expand the women's apparel and footwear business that reached $1 billion in sales last year.
"Kohl's has a large and loyal customer base, the majority of which are women shoppers," Plank said during the call. "We want to reach our customers where they expect to find Under Armour products."