What Led to Under Armour’s Massive International Growth in 1Q16?
Under Armour’s international sales
Under Armour’s (UA) international sales grew 55.6% to almost $150 million in 1Q16. Sales growth in overseas markets came in at 64.6% in currency-neutral terms. International sales include sales outside the United States and Canada. International sales now account for about 14% of total sales, up from about 12% a year ago. According to its Investor Day update last year, UA plans to increase the sales contribution from the international segment to about 18% of revenue by 2018.
The China effect
China (FXI) emerged as the largest country in terms of sales in UA’s international segment, according to Chip Molloy, CFO of Under Armour. Sales in China’s market nearly tripled from the comparable quarter of the previous year, boosted by the Curry 2 basketball footwear line. Curry also personally visited China last year, enabling brand building for Under Armour and enhancing the popularity of basketball in China.
In 2015, UA also aggressively expanded the number of doors in China, most of them via partnerships, and it plans to add another 120 doors in China this year, according to CEO Kevin Plank.
Fitness boom in China
China is also an important market for Under Armour’s rivals Nike (NKE), Adidas (ADDYY), and Puma (PMMAF) (PPRUF). While macro headwinds persist in China, sporting goods and “athleisurewear” firms have been relatively immune to their effects thus far. Nike saw greater China sales jump 23% (27% in currency-neutral terms) to $982 million in fiscal 3Q16, which ended February 29. Adidas reported a 28% increase (16% in currency-neutral terms) in greater China sales to 617 million euros in 4Q15. The new retail outlet opened by Lululemon Athletica (LULU) in Hong Kong has been one of the most productive in the company’s store fleet.