Why Under Armour Is Expanding Its Digital Sphere with Wholesalers



Why Under Armour (UA) expects to double its sales from wholesale accounts

At its 2015 Investor Day on September 16, Under Armour (UA) mentioned that it expects sales from all selling channels to grow at a 20%-plus growth rate through 2018. Wholesale channels—sales made through other retailers (FXD)—are UA’s largest selling channel, representing over ~67% of sales in 2014.

Article continues below advertisement

Sales projections

UA expects to more than double its sales from its wholesale channel, from $2.1 billion in 2014 to $4.4 billion in 2018. That’s a CAGR[1. Compound annual growth rate] of 21%.

The opportunity

UA is looking at higher visibility at premium locations and growth in several wholesale channels besides sporting goods retailers. It’s recently hired channel specific leaders such as a VP of Sporting Goods, a VP of Mall Specialty, a VP of Department Store, and a VP of Outdoor. The company is eyeing higher opportunity with wholesalers—especially in categories like outdoors with Cabela’s (CAB), where its products are marketed in the premium segment.[2. According to comments by Matt Mirchin, President, North America, Under Armour].

Article continues below advertisement


UA plans to have over 2,000 shops-in-shops worldwide with key wholesale accounts by 2018. The company recently started The ARMOURY at Champs, a collaboration with Foot Locker (FL). It’s also opened new shops-in-shops at Macy’s (M) in New York for both men’s and women’s apparel.

Over the coming year, UA plans to open 400 shops-in-shops in partnership with Dick’s Sporting Goods (DKS) for basketball and running footwear. UA also believes there’s significant opportunity to explore with Foot Locker (FL), as its products are available in less than half the retailer’s mall outlets.[3. According to comments by Matt Mirchin, President, North America, Under Armour]

Digital content management

A key driver for higher wholesale revenue is surprisingly UA’s digital platform and e-commerce presence. The initiative is likely to benefit both the wholesaler and UA and drive higher sales.

Several wholesale accounts—including Cabela’s (CAB), Macy’s (M), Dick’s Sporting Goods (DKS), and Sports Authority—are making use of either UA’s e-commerce imagery or digital platforms for higher customer visibility. UA’s setting up a new asset management system, allowing the wholesaler to use digital content available on UA’s websites.[4. According to comments by Matt Mirchin, President, North America, Under Armour]

UA, M, CAB, DKS, and FL together constitute 4.4% of the portfolio holdings in the First Trust Consumer Discretionary AlphaDEX(R) Fund (FXD).


More From Market Realist