Profits Soar For Under Armour in 3Q

by Trefis Team
Under Armour
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Under Armour (NYSE:UA) saw an earnings beat as net income jumped over 40%, with revenue coming in 2% higher. Led by international sales, Under Armour was able to post a revenue and earnings beat for the quarter, despite U.S sales stagnating.

We currently have a price estimate of $18 per share, which is 20% higher than the market price. You can use our interactive dashboard Under Armour Results For 3Q  to modify key drivers and visualize the impact on Under Armour’s price estimate.

U.S Sales have stagnated primarily due to Under Armour’s own missteps. Not keeping up with trends in the athletic wear industry and focusing far too much on a single segment meant competitors like Nike and Adidas were able to regain momentum in the footwear & apparel market. Trends have increasingly moved to the athleisure market, which Nike, Adidas, and Lululemon have capitalized on. Under Armour’s niche focus on athletics has meant it has lagged behind its peers, with Under Armour now having to play catch up. The continued focus on athletics has meant that Under Armour is not in line with the preferences of key demographics, mainly Millennials. Nike and Adidas have been increasingly targeting Millennials for growth, through both marketing campaigns and through product lines, their strategy has paid off as sales have regained momentum in key markets (North America).

Under Armour, therefore, has decided to focus mainly on international markets where it believes the playing field is a lot more even. International sales rose by 15% year-over-year, as Latin America and Asia-Pacific drove growth. Asia-Pacific markets continue to be the focus of Under Armour as key markets, i.e China, continue to flourish. Going forward, we can expect Under Armour to continue focusing on its turnaround strategy, revolving around improving its products and brand image, especially in the  Asia-Pacific.


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