Under Armour Rallies as Global Push Helps Ease Slump at Home

Under Armour Inc. renewed faith that it can bounce back from the worst slump in its history as robust international growth cushions weakness on the home front.

The athletic-wear company reported fourth-quarter revenue that topped projections, led by a 47 percent increase in sales outside North America. That helped drive the stock up as much as 20 percent on Tuesday, the most in more than two years.

The results provide optimism that Baltimore-based Under Armour can restore its cachet as a trailblazing athletic brand. As part of its push to improve design and results, the company will eliminate about 40 percent of its products by the end of next year to focus on its best-performing lines. It also announced another round of cost cutting and restructuring.

Global Gains

Under Armour’s international sales are growing while North America stagnates

Source: Bloomberg

“It is taking the right steps to realign its product offerings to market conditions,” said Chen Grazutis, an analyst at Bloomberg Intelligence. “Under Armour is still very underpenetrated in international markets compared to its peers, and that’s where the real opportunity remains.”

The company expects 2018 to be similar to last year, according to a statement Tuesday, with full-year revenue increasing at a low-single-digit rate from $5 billion in 2017. North American sales will drop by a mid-single-digit percentage, while it sees international growth of at least 25 percent.

The jury is still out on whether the slimmed-down product portfolio “will “be enough to bring back demand for the brand in the U.S.,” Grazutis said. “While the domestic sporting goods market will remain challenging in 2018, it appears management has acknowledged that, and set expectations lower.”

Just two years ago, Under Armour was an investor darling. At the time, NBA star Stephen Curry’s shoe line was pumping life into its sneaker business, helping boost 2015 revenue 29 percent. Since then, a rebound by Adidas AG has hurt the company.


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