Sneaker Sales Propel 3Q Surge In Under Armour Earnings
Sportswear giant Under Armour reported a third-quarter profit of $38.9 million, partly driven by a revenue jump of 19 percent in the footwear category, the company said in a statement on Friday (Oct. 30).
The Baltimore-based chain also announced the sale of its MyFitnessPal workout platform to private-equity firm Francisco Partners. The deal is valued at up to $345 million. Under Armour acquired the business for $475 million in 2015.
Patrik Frisk, president and CEO of Under Armour, told The Baltimore Sun that the company is focused on returning to profitability and is planning to invest in eCommerce and company-owned retail outlets.
"Our third-quarter results reflect considerably better than expected performance due to higher demand and our strong execution, especially in North America. We believe that the critical mass of our transformational challenges is behind us, and we remain sharply focused on operational improvements and financial discipline to accelerate strategies to create sustainable, long-term growth for the Under Armour brand and our shareholders,” Frisk said in the statement.
The brand is also making moves to reel-in the number of brick-and-mortar locations that carry the Under Armour line.
Under Armour was founded in 1996 by former University of Maryland football player Kevin Plank who stepped down as chairman and CEO last year, handing the reins to Frisk, the company’s former chief operating officer.
According to the statement, international sales spiked 18 percent, reaching $433 million, driven by a 31 percent increase in sales in the Europe-Middle East-Africa region. The Asia-Pacific region saw a 15 percent jump in sales. North American sales dropped 5 percent and Latin America declined 15 percent.
Aside from the surge in sneaker sales, accessories revenue increased 23 percent to $145 million. Apparel revenue dropped 6 percent to $927 million. COVID-related discounts and inventory issues due to supply chain challenges caused a drop in gross margin to 47.9 percent, down 40 points compared to last year.
In February, Under Armour started predicting steep losses due to competition from brands like Lululemon and Nike. After over 20 years of quarterly revenue growth above 20 percent, the company registered its first quarterly loss in 2017.