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Under Armour's Focus on Digital Fitness Business Bodes Well

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Under Armour, Inc.’s (UAA - Free Report) sustained focus on brand development, and the expansion of direct-to-consumer (DTC) and technology-based fitness businesses bode well. Furthermore, apart from rolling out e-commerce platforms, the company continues to look for opportunities to expand its global footprint and market share.

Moreover, in the past few years, Under Armour has been trying to boost its DTC business (offering merchandise via the network of brand and factory house stores, and its website and catalogs) through store expansion initiatives and the enhancement of its e-commerce platform.

These efforts have helped the stock to outperform not only the industry but also the overall sector in the past three months. The stock has gained around 34% compared with the industry’s increase of 13.7% and overall sector’s rise of 8.7%.

 

Let’s find out whether the company will be able to sustain growth over the long haul.

Focus on Digital Fitness Business

With increasing consciousness about fitness among people, sports apparel makers are entering fitness gadget business and other tracking platforms to attract customers. The company has been making several strides in this space.

In this regard, the acquisition of the fitness technology company, MapMyFitness, in December 2013 for $150 million is worth mentioning. Further, the buyouts of Endomondo — a fitness tracking platform and social fitness network connecting athletes — and the nutrition-tracking platform, MyFitnessPal, for $85 million and $475 million, respectively, are also in line with the company’s strategy of expanding its reach in the fitness space.

These apart, this Zacks Rank #1 (Strong Buy) also unveiled its state-of-the-art line of Connected Fitness products, comprising UA HealthBox, UA SpeedForm Gemini 2 Record Equipped and two models of wireless headphones.

Per management, the sale of UA HOVR, which was launched in February 2018, surpassed expectations. The launch of these shoes reflects the company’s continued focus on running shoes to make a runner’s journey more comfortable.

The HOVR platform launched two running styles, namely, UA HOVR Sonic and UA HOVR Phantom. Moreover, these shoes can be connected to the MapMyRun app. Management is banking on three platforms — HOVR, Charge and Micro G — to boost growth.

Expanding Global Footprint

Though the company generates the major portion of its revenues from the North American region, it intends to expand business operations to other parts of the world to mitigate risks, stemming from the concentration in one geographic region.

In the process, over the years, the company opened its factory and brand stores in Canada and China as well as given franchise licenses in many countries. Moreover, the company is expanding its DTC business in the U.K., Germany and the Netherlands. Further, it has rolled out e-commerce platforms in countries like Mexico, Australia, New Zealand and Chile.

3 Other Stocks Hogging the Limelight

Lululemon Athletica Inc. (LULU - Free Report) has a long-term earnings growth rate of 13.4% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

G-III Apparel Group, Ltd. (GIII - Free Report) has a long-term earnings growth rate of 15% and flaunts a Zacks Rank #1.

Delta Apparel, Inc. (DLA - Free Report) has a long-term earnings growth rate of 15% and sports a Zacks Rank #1.

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