Under Armour Soared after 4Q17 Results

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Part 2
Under Armour Soared after 4Q17 Results PART 2 OF 5

Under Armour Returned to Growth in 4Q17

What drove Under Armour’s 4Q17 top line?

Under Armour (UAA), which reported its 4Q17 results on February 13, 2018, had a 4.6% increase in total sales to $1.4 billion. It edged out Wall Street’s expectations of a 0.3% YoY (year-over-year) increase in its top line to $1.3 billion, driven mainly by strong momentum in its international business.

Under Armour Returned to Growth in 4Q17

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Under Armour’s sales growth had turned negative in 3Q17, marking the first decline in sales after being listed in 2005.

“A year into this journey, our fourth quarter and full year results demonstrate that the tough decisions we’re making are generating the stability necessary to create a more consistent and predictable path to deliver long-term value to our shareholders,” said Kevin Plank, Under Armour’s chairman and CEO (chief executive officer).

Revenue in North America, the company’s largest market, continued to deteriorate and fell 4.5% during the quarter. In the next part of this series, we’ll look at UAA’s performance in key product categories, distribution channels, and geographies.

Here’s how Under Armour’s growth slowed down in fiscal 2017

For fiscal 2017, Under Armour’s total sales increased 3% YoY to $5 billion. That compares to an average 29% growth between fiscal 2011 and fiscal 2016. A change in customer preferences away from performance wear to casual wear hit Under Armour’s sales growth in the last couple of quarters.

Rivals Adidas (ADDYY) and Puma snatched the footwear market share away from both Under Armour and industry leader Nike (NKE) by introducing successful retro styles.

However, domestic player Skechers (SKX) also delivered strong growth. In fact, the California-based footwear company posted 17% YoY growth in annual sales when it reported its financial results on February 8, 2018.

ETF investors seeking to add exposure to UAA can consider the SPDR Consumer Discretionary Select Sector ETF (XLY), which invests 0.2% of its portfolio in the company.


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