Under Armour Q3 Earnings: Could It Be A Turnaround Story?

Under Armour is up 20% after Q3 earnings as it beats estimates and updates guidance despite ongoing supply-chain and logistics concerns

Nov. 2, 2021

Under Armour (NASDAQ: UAA) has been in business for over 20 years now, officially IPO’ing in 2005. It’s been a love/hate relationship for many investors with no shortage of disruptions and scandals, seeing the stock price bounce from single digits to the mid-20s for what feels like an eternity.

Under Armour’s business model

Kevin Plank founded the business in 1996, setting out to create an apparel brand that would optimize athletes’ performance. The apparel business is a tight-margin industry with many large competitors, but Under Armour has been able to grow into a multi-billion dollar brand in spite of these challenges.

It pioneered in the fitness industry with thermal gear that adapted to your body temperature in 1997, and since then, it has created the largest connected fitness community in the world with its acquisition of MyFitnessPal in 2015. Under Armour has adopted an influencer marketing strategy for many years to build its brand, with icons like Steph Curry and Dwayne “The Rock” Johnson among its team of brand ambassadors.

Q3 2021 Earnings Results

Revenue came in at $1.55 billion v.s. analyst estimates of $1.48 billion and earnings per share were double that of expectations, $0.31 v.s. $0.15 expected.

Sales appear to be back on track despite supply chain disruptions, with sales up 27% in Latin America, up 15% in Europe, 19% in the Asia Pacific, and a modest 8% in its core market, North America. 

Wholesale revenues were up 10% to $911 million, and direct-to-consumer sales were up 12% to $604 million, attributable reopened economies, and this allowed the company to offset its 4% decline in e-commerce sales.

Future Outlook

Guidance has been updated for the fiscal year 2021, with higher than expected revenue, earnings, and gross margins. This is a great stepping stone for the business to get back on track, but Under Armour still has a long way to go to reach the heights of competitors Nike (NASDAQ: NKE) and Adidas. Investments in the brand, innovation, sustainability, and customer-centricity may eventually pay off.