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Europe and China Hike Under Armour’s International Performance

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Under Armour’s 4Q15 international sales

For fiscal 2015, Under Armour (UA) posted international sales of $454 million, which was up 69% over 2014. In 4Q15, the company’s international sales rose by 69.8% YoY (year-over-year) to almost $139 million. In constant currency terms, sales grew by 85% in 4Q15, and by 84% in 2015. In 2015, according to CEO Kevin Plank, “every region, every category, and every channel exceeded [Under Armour’s] plans.”

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Sales drivers

Under Armour has been aggressively expanding its international presence via owned retail doors, wholesale doors, and e-commerce sites. The company launched nine new e-commerce sites in 2015 and reported seeing traction in the United Kingdom and Germany—two of the biggest markets in the EMEA (Europe, the Middle East, and Africa) region—and in the Asia-Pacific, particularly in China, which saw triple-digit growth according to Brad Dickerson, the former CFO of Under Armour.

Rising mix

The revenue contribution from Under Armour’s international operations also rose from 8.7% in 2014 to 11.5% in 2015. By contrast, Nike (NKE) derived about 55% of its sales from outside North America in 2015, while Lululemon Athletica (LULU) derived only 5.9% from outside North America the same year.

Most importantly, for Under Armour, its international segment is finally beginning to generate profits. The company’s operating income from overseas operations outside of North America came in at $9 million in 2015, compared to the -$5 million it saw in 2014. While these profits aren’t very significant yet—and while profitability is likely to continue to lag in its North America segment—it’s important that the company sees both top and bottom line growth in its overseas segment and that the latter doesn’t drag down overall performance.

Under Armour makes up ~1.4% of the total portfolio holdings in the Guggenheim S&P 500 Pure Growth ETF (RPG) and about 0.20% of the total portfolio holdings in the PowerShares FTSE RAFI US 1500 Small-Mid ETF (PRFZ).

In the next part, we’ll look at Under Armour’s recent partnerships.

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