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Under Armour’s Top Line Growth Trends and Outlook

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Recent trends

Over the trailing 11 quarters, Under Armour (UAA) has beaten sales estimates eight times.

The company beat analysts’ top-line estimates by 6.1% in the first quarter of 2018 and 2.4% in the second quarter. In the third quarter, revenue beat projections by 1.8%.

Moreover, in the third quarter, revenue grew 2.7% year-over-year. Revenue grew ~6.1% and 8.0% YoY (year-over-year) in the first and second quarters, respectively. The company’s top-line growth was driven by growth in international, direct-to-consumer, and wholesale operations, whereas North America remains a concern.

In the first two quarters of 2018, Under Armour reported international revenue growth of 27% and 28%, respectively. In the third quarter of 2018, international revenue rose 15%.

For the fourth quarter, analysts expect revenue to rise 1.2% YoY to $1.38 billion. Under Armour hasn’t provided an outlook for the fourth quarter.

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Long-term targets

Recently, Under Armour held its investor meeting. It established financial targets for 2023, projecting revenue to return to a low double-digit growth rate by 2023. For international operations, the five-year revenue CAGR is expected at 17%–19%, and for North America revenue, CAGR is forecast in the range of 1%–3%.

Under Armour kept its 2018 revenue growth unchanged. Its revenue is expected to increase 3%–4%. Even for 2019, the revenue is expected to rise 3%–4% YoY. For 2019, revenue from North America is forecast to be flat YoY. International markets could record low double-digit growth in 2019. North America should remain muted in the coming quarters, whereas international operations should continue to strengthen.

To improve in North America, Under Armour is working on stabilizing the core market by streamlining its store footprint and lowering promotional activity. It’s also implementing a tight inventory management system.

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