Under Armour, Inc.’s (UAA - Free Report) not so impressive run may deter investors from including it in their portfolio, but a closer look into the company’s robust strategies is likely to uplift their sentiments. Although shares of this athletic footwear, apparel, and accessories provider have lost 16.6% in a month compared with the industry’s decline of 5.6%, one cannot ignore the stock’s solid focus on brand development, expansion of direct-to-consumer (DTC) business and well-chalked restructuring plans.
Under Armour’s strong fundamentals and prospects are also reflected in the company’s Zacks Rank #2 (Buy).
What Makes Under Armour a Prospective Pick?
Under Armour has undertaken impressive store expansion initiatives and e-commerce enhancement endeavors to boost its DTC business. Further, Under Armour has rolled out e-commerce plans in countries like Mexico, Australia, New Zealand and Chile. Earlier, management anticipated DTC business to grow at a mid to high-single-digit rate in 2018.
Also, in a bid to attract customers, Under Armour is entering into the business of fitness gadgets and other tracking platforms. The acquisition of MapMyFitness, Endomondo and MyFitnessPal are in line with the company’s strategy of expanding its reach in the fitness space. By acquiring these fitness technology companies, Under Armour has enriched its digital capabilities, which will enable it to launch digital products and fitness tracking platform, while promoting its own products.
The company 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. Also, the company launched UA HOVR in February 2018 with two running styles, namely the UA HOVR Sonic and UA HOVR Phantom, under the HOVR platform. Moreover, these shoes can be connected to the MapMyRun app. Going ahead, management is banking on three platforms — HOVR, Charge and Micro G — to boost growth.
Apart from this, the company is well on track with its 2018 restructuring plan to utilize financial resources more efficiently. This will better cater to the evolving demands of the changing consumer environment. In this regard, the company announced plans to reduce 3% of its global workforce. This move, which is likely to impact jobs of 400 employees, is expected to be concluded by March 2019. This will enable the company to simplify its organizational structure, attain cost effectiveness and operational efficiencies, and allocate resources in best alternatives.
Although management is concerned about sluggish sales in North America, the above-mentioned strategies present adequate reasons for investors to see potential in Under Armour.
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