Weak North American Sales Force Under Armour to Revise Outlook
Under Armour revises guidance As discussed in the previous section, Under Armour’s (UAA) top line grew 8.6% YoY (year-over-year) in 2Q17, against the average growth of 20% it saw up until 3Q16. This slowdown was primarily anchored by weakness in its North American business, which grew by just 0.3% during the quarter. The wholesale business was […]
Aug. 31 2017, Updated 6:56 p.m. ET
Under Armour revises guidance
As discussed in the previous section, Under Armour’s (UAA) top line grew 8.6% YoY (year-over-year) in 2Q17, against the average growth of 20% it saw up until 3Q16. This slowdown was primarily anchored by weakness in its North American business, which grew by just 0.3% during the quarter. The wholesale business was particularly weak, while online sales showed some strength.
According to MarketWatch, GlobalData Retail analyst Anthony Riva wrote in a client note that “given that North America still accounts for over three-quarters of Under Armour’s revenue, a chilly performance here means the company as a whole has caught a cold.”
Weak North American sales forced Under Armour’s management to revise its fiscal 2017 sales forecasts. The company is now expecting top-line growth of 9%–11% instead of 11%–12%.
International business continues to grow
Internationally, Under Armour was successful in maintaining its brand strength. Sales grew by a massive 57% in overseas markets and made up 22% of its 2Q17 top line.
Geography-wise, EMEA (Europe, the Middle East, and Africa) revenue was up 57%, driven by strong momentum in the United Kingdom and Germany. Asian business grew an impressive 89%, recording strong performance in China, Taiwan, and Korea.
Revenue by channel
Channel-wise, wholesale revenue grew 3%, while the DTC (direct-to-consumer) business recorded 20% growth globally. In North America, gains from strength in the DTC business were partially offset by uneven wholesale revenue. In overseas markets, however, wholesale and DTC revenue stood firm.
Investors seeking exposure to Under Armour could consider the PowerShares S&P 500 High Beta Portfolio ETF (SPHB), which invests 0.83% of its portfolio in the company. Read about the company’s product-wise performance in the next section.
