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Under Armour Soared after 4Q17 Results

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Part 3
Under Armour Soared after 4Q17 Results PART 3 OF 5

Under Armour: Strong International Makes Up for Domestic Decline

4Q17 revenue drivers

As we saw in the previous part of this series, Under Armour’s (UAA) top line grew 4.6% YoY (year-over-year) to $1.4 billion in the fourth quarter of 2017. While its North America market continued to lag, its international business showed strong momentum and drove the company’s overall growth.

Under Armour: Strong International Makes Up for Domestic Decline

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North America sales continue to tumble

Under Armour continued its struggle in North America with sales falling 4.5% to $1 billion. The company recorded a sales decline in the region in three quarters of fiscal 2017. For the year, total North America sales fell 5% to $3.8 billion.

Nike’s (NKE) sales fell 5% in North America, even though its total sales increased 4.6% during the last reported quarter. Skechers (SKX), however, posted solid gains in North America in its 4Q17 results on February 8, 2018. Its wholesale sales in the region grew 11.6%, while retail sales rose 15.2% during the quarter.

International business continued to grow

Growth in UAA’s international business helped make up for the domestic decline. International sales improved an impressive 47% in 4Q17 and 46% in 2017, driven by continued strength in EMEA (Europe, the Middle East, and Africa), Asia Pacific, and Latin America. Overseas sales contributed 22% to UAA’s fiscal 2017 sales.

Footwear and DTC drove growth

UAA’s footwear sales recorded a significant 9% growth in 4Q17 compared to less than 1% growth in the first nine months of 2017. Apparel sales increased 2% and returned to growth after falling close to 8% in 3Q17.

Its wholesale revenue fell 1% to $733 million in 4Q17, while its DTC (direct-to-consumer) sales increased 11% to $575 million.

For fiscal 2017, growth was driven by the DTC channel, which grew 14% during the year. Growth was anchored by low double-digit growth in the store base and a high-teen increase in its online business.

In the next part, we’ll look at UAA’s profitability in 4Q17.

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