Under Armour Struggles in North America, But Strong Internationally

Kevin Plank the CEO at Under Armour said the company will focus the brand during 2018. Shares of Under Armour were given a boost from a revenue beat for the fourth quarter, but more than one Wall Street analyst thinks the companies brand weakness it has in North America will hurt its overall performance moving ahead.

On Tuesday, Under Armour posted $1.37 billion in revenue, which was up from last year’s $1.31 billion and beating analyst’s forecasts for $1.31 billion. North America revenue was 4% lower for the quarter, while revenues internationally grew by 47%.

Adjusted per share earnings were breakeven, which was in line with analyst expectations. Shares of Under Armour were up during trading on Tuesday by almost 16%.

While growth overseas should be praised, it brings with it investment costs and represents only 25% of the revenue for the group, said one Wall Street analyst. Because of that, Under Amour remains reliant on its operation in North America for driving performance for both its top and bottom lines.

For that to be achieved, the analyst said Under Armour must increase brand identity, through expansion into more retailers such as Kohl’s. A brand that remains muted leaves a business vulnerable to competition, he added.

Under Armour CEO Kevin Plank talked with analysts about the approach the company has to its brand during the company earnings call on Tuesday.

In 2017, the company was loud but the brand was quiet, but in 2018 the plan is for being a quiet company with a loud brand, said Plank.

Plank cited the HOVR launch to make that happen. HOVR is technology found in items such as the running shoes sold by the company. The technology is not only designed for performance and style, but the global campaign launch shows the amplified storytelling the company wants to employ during 2018.

However, one analyst on Wall Street said 2018 would be a rough year saying that Under Amour does not any longer appear to be growing and cannot understand why shares have been trading at such high values.

Under Armour shares are 23% lower over the last year, but are up by 34.5% the last three months, while the S&P 500 is up by 2.6% the past three months.