Translated by
Nicola Mira
Nov 3, 2017
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Under Armour's results undermined by US retail situation, all other regions grow

Translated by
Nicola Mira
Nov 3, 2017

The quarter closed at the end of September was a particularly troubled one for Under Armour. The US sport apparel brand, which boomed in recent years, has been dealing with the consequences of the retail distribution crisis currently hitting the USA.

Under armour

In the latest quarter, Under Armour's revenue fell by 4.5% to $1.4 billion (€1.2 billion). In North America, sales were down 12.1%, to $1.08 billion. EMEA sales on the other hand grew by nearly 22%, reaching close to $128 million. Asia-Pacific sales were up 52% to $130 million, and in Latin America they rose 33% to nearly $47 million. The connected fitness business is also on the up, growing by nearly 16% to $23 million.

But it is Under Armour's operating income that is floundering. The brand explained that the downturn is linked to the ongoing North American restructuring, as its operating income lost nearly 69%, falling to $62.2 million. A 102% operating income growth in the EMEA region allowed Under Armour to generate a $17 million result there, and the brand also posted increases of 26% and 3% respectively in Asia-Pacific (worth $34 million) and Latin America (-$10 million). The loss being made on connected fitness instead worsened, and is now $44.6 million.

To fight the slump, which is expected to continue in the next few months, Under Armour relies on new product launches, such as the Curry 4 shoe or, in the running segment, which the brand regards as its main growth opportunity, on the launch of the new HOVR shock-absorber system. The latter also features digital sensors, targeting the connected sport segment. Under Armour's senior management team, led by Kevin Plank, is convinced the brand still has a strong growth potential. For example, only about 20% of its business comes from footwear, compared to about 50% for its competitors.

Under Armour is also busy analysing consumer behaviour, exploiting its connected sport services and apps, and combining their data with a more classic survey carried out with nearly 20,000 consumers. The study should allow Under Armour to better identify its customers, and perhaps bounce back to growth in 2018.

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