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Shares of Under Armour (UAA) Jump on New CEO Announcement

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Investors gave a thumbs up to Under Armour, Inc.’s (UAA - Free Report) CEO succession plan. The stock jumped nearly 6.5% during the trading session on Oct 22, following the company’s announcement that Patrik Frisk will take the baton from Kevin Plank. Frisk’s new role as Chief Executive Officer (CEO) and president will take effect from Jan 1, 2020.

Kevin Plank, founder and current CEO, will step down and become executive chairman & brand chief enduring to lead Under Armour's board of directors. Plank will be focusing on product elevation, strengthening the brand and managing team culture.

With experience of about three decades in the apparel, footwear and retail industry, investors hope that the new leadership will help the company steer through cut-throat competition and market vagaries. Frisk’s major challenge will be to revive a sluggish business scenario in North America. Net revenues from North America fell 3.2% during the second quarter of 2019 due to decline in both wholesale and direct-to-consumer businesses. Moreover, management had earlier guided a marginal decline in North America revenue during fiscal 2019.

Keeping apart the same, Under Armour is progressing well with its multi-year transformation plan. The company is focused on strengthening its brand through enhanced customer connections, effective innovations and strict go-to-market process. In order to harness benefits from growth areas, the company intends to consistently invest in the direct-to-consumer, international, women's and footwear businesses. It also plans to introduce improved athletic products.

Apart from rolling out e-commerce platforms, the company continues to look for opportunities to expand footprint. Its international business remains one of the growth drivers. The company projects international revenues for fiscal year to increase in low to mid-teen percentage rate. For fiscal 2019, management envisions net revenues to increase 3-4% based on 3-4% growth in both wholesale and direct-to-consumer.

In the past year, shares of this Zacks Rank #3 (Hold) company have increased 15.4%, outperforming the industry’s growth of 3.1%.

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