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Under Armour (UAA) Concludes MyFitnessPal Platform Sale

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Under Armour, Inc. (UAA - Free Report) is progressing well with its transformation plan. The company remains focused on strengthening its brand through enhanced customer connections, effective innovation and strict go-to-market process. Recently, it completed the divestiture of its MyFitnessPal platform to Francisco Partners. In October 2020, it had agreed to sell the MyFitnessPal platform at $345 million. The transaction value is inclusive of the achievement of potential earn-out payments, while the deal’s debt financing was provided by MidCap Financial.

Management had earlier cited that the divestiture announcement helps the company lower the complexity of the consumer's brand journey and focus on long-term digital strategy. This also provides the company investment flexibility to achieve higher returns and boost shareholders’ value in the long run. Under Armour remains keen on actively optimizing its business and prioritizing assets so that it can effectively focus on its target consumer — the Focused Performer.

We note that MyFitnessPal supports nearly 200 million users in their health and fitness journey. The platform used to report under Under Armour's Connected Fitness segment. The segment also houses the MapMyFitness and Endomondo platforms. Management had also declared plans to discontinue the Endomondo platform's operations by the end of 2020. This will leave the segment with the MapMyFitness platform, including MapMyRun and MapMyRide. In fact, Under Armour highlighted that the MapMyFitness platform is an important part of its digital strategy, and so is its connected footwear business.

Meanwhile, Under Armour has been trying to boost its direct-to-consumer business through store expansion initiatives and enhancement of its e-commerce platform. During the third quarter of 2020, direct-to-consumer revenues grew 17% to $540 million due to strength in e-commerce. Impressively, the company registered sturdy e-commerce growth globally, with sales up more than 50%. The company plans to continue pulling back on promotions and discounts to drive premium brand positioning. Efforts to build brand image, expand the direct-to-consumer business, manage inventory and contain costs should benefit the company in the long run.

Impressively, shares of this Zacks Rank #3 (Hold) company have surged 59.1% over the past three months, outperforming the industry’s 26.7% growth.

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