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Under Armour (UAA) Sees Growth in Digital Sales & DTC Business

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Under Armour, Inc. (UAA - Free Report) is gaining from growth in e-commerce sales, which has been supporting growth in the direct-to-consumer (DTC) channel. Additionally, the company’s effective brand strategies, product innovations, efforts to boost international footing have been yielding. In fact, management’s well-chalked operating strategies and investments have been aiding the company to meet strong demand conditions for its products. That said, let’s take a closer look at the aspects aiding this well-known athletic apparel, footwear and accessories company.

Sturdy E-commerce & DTC Business

Consumer’s inclination toward digital transactions has increased amid the pandemic. During the first quarter of 2021, Under Armour witnessed 69% jump in e-commerce sales that supported revenue growth in the DTC channel. During the quarter, the company’s DTC channel witnessed a surge of 54% to reach $437 million. Moreover, the company’s e-commerce business contributed approximately 45% to its total direct-to-consumer business. The company plans to continue investing in boosting digital capabilities to drive growth in the DTC channel. Additionally, the company’s DTC business is gaining from growth in owned and operated retail stores. We note that other apparel retailer such as Columbia Sportswear Company (COLM - Free Report) , G-III Apparel Group, Ltd. (GIII - Free Report) and Guess?, Inc. (GES - Free Report) are also gaining from strong online sales growth.

Other Strategic Endeavors

Under Armour is progressing well with its multi-year transformation plan. Its long-term growth strategy is focused on improving sales through product innovation, investments in stores and digitization as well as selling more inventory at full price. Additionally, the company is focused on strengthening its brand through enhanced customer connections and strict go-to-market process.  

Also, the company’s international business has been doing well. Revenues from the international unit increased 57.8% (or up 50.2% on a currency-neutral basis) to $452 million during the first quarter of 2021. Within the international business unit, net revenues from Asia-Pacific and EMEA increased 119.7% and 40.6% to $210.2 million and $193.9 million, respectively. The company continues to seek opportunities for expanding its global footprint.

Wrapping Up

We expect that the company’s strong brand portfolio, solid market presence and efficient e-commerce business should continue to contribute to the company’s performance. Backed by such upsides, the company provided an optimistic view for fiscal 2021. Management anticipates full-year 2021 revenues to increase at a high-teen percentage rate, up from the prior projection of high-single-digit percentage rate increase. The raised top-line view reflects a high-teen percentage growth rate in North America and low-thirties percentage growth rate in the international business. Further, the company envisions adjusted earnings in the band of 28-30 cents a share, up from the previous expectation of 12-14 cents a share. In respect of second-quarter 2021, the company expects revenues to rise 70% year over year.

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