Under Armour bounces back from COVID — reports highest sales growth in 3 years – The Average Joe
Business Economy Tech Subscribe About Us

    Under Armour bounces back from COVID — reports highest sales growth in 3 years


    August 4, 2021

    Under Armour

    Under Armour (NYSE:UA), the sports clothing company, reported better than expected second-quarter earnings — sending its stock up 6%.

    What’s the big deal? The impressive earnings report sets the stage for two things: the rebound in athletic apparel and the return of a fallen athletic giant. In the recent quarter:

    • Sales grew 91% to $1.3b — above the expected $1.2b.
    • Earning per share of $0.24 — above the expected $0.06.

    Moving forward, UA anticipates sales to grow in the low 20s percentage — higher than previously expected and the highest in more than 3 years.

    180-degree turn: Once deemed the next Nike and overtaking Adidas, UA’s stock rose 1,500% over 10 years, peaking in 2015 — and crashing 75% the following 2 years as company problems surfaced:

    • Toxic company culture (i.e. strip club visits), plus then-CEO, Kevin Plank, being sued for misleading investors and criticized for supporting Trump.
    • Investigations into its business for its accounting practices and slowing growth.

    It also made several strategic mistakes — expanding too fast and getting left behind as the clothing industry shifted towards fashion and athleisure. In 2019, Kevin Plank was replaced as CEO with Patrik Frisk.

    Fast forward, today: New CEO, new pandemic, new company. Frisk repositioned the company with a focus on profitable growth by:

    • Pulling out of 2-3k partner stores and selling via e-commerce and its own stores (for higher profitability).
    • Ending a licensing deal with the NFL in 2021 and pulling out of its previously committed commitment with MLB.

    With e-commerce making up only 16% of its sales — short of Nike’s 30% plus — UA’s transformation has a long way to go before catching up to Nike.

    Trending Posts