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Under Armour Drives Growth With Operational Excellence & Innovation
UAAUnder Armour(UAA) ZACKS·2025-01-07 18:41

Strategic Focus - The company is focusing on premium product offerings, operational efficiency, and global expansion to drive growth and market differentiation [1] - Under Armour is refining core products, enhancing direct-to-consumer (DTC) channels, and strengthening customer loyalty through its membership program [1] - The company is leveraging athlete partnerships and data-driven marketing to elevate its global presence and competitive positioning [2] Product and Operational Strategy - Under Armour is investing 40millioninbrand−buildingmarketingeffortsacrosstheAmericas,EMEA,andAsia−Pacificregions[5]−Thecompanyissimplifyingitsproductline,reducingSKUcomplexity,andadoptingaselectivepromotionalapproachtoboostprofitability[6]−UnderArmouristargetingyoungathletesandteamsportsintheAmericas,premiumdistributioninEMEA,andbrandequityintheAsia−Pacificregion[8]GlobalExpansionandE−Commerce−Thecompanyisexpandingitsinternationalfootprintwithhigh−profileathleteendorsements,suchasStephenCurryinChinaandDe′AaronFox′ssignatureshoelaunch[9]−UnderArmouropeneda24,000−square−footflagshipstoreinBaltimore,offeringapremiumretailexperienceandsettingastandardforfuturestores[10]−Full−pricee−commercesalesnowaccountfor5040 million in brand-building marketing efforts across the Americas, EMEA, and Asia-Pacific regions [5] - The company is simplifying its product line, reducing SKU complexity, and adopting a selective promotional approach to boost profitability [6] - Under Armour is targeting young athletes and team sports in the Americas, premium distribution in EMEA, and brand equity in the Asia-Pacific region [8] Global Expansion and E-Commerce - The company is expanding its international footprint with high-profile athlete endorsements, such as Stephen Curry in China and De'Aaron Fox's signature shoe launch [9] - Under Armour opened a 24,000-square-foot flagship store in Baltimore, offering a premium retail experience and setting a standard for future stores [10] - Full-price e-commerce sales now account for 50% of online revenues, up from 30% a year ago, with DTC sales increasing 7.6% year-over-year to 550.3 million in Q2 FY25 [11] Customer Loyalty and Membership Growth - The loyalty program has nearly 13 million members in the U.S. and 28 million globally, with 6 million new members added in Q2 FY25 [12] - Active members contribute to approximately 50% of U.S. DTC revenues, generating 50% more revenue per customer and nearly doubling the repurchase rate compared to non-members [12] Financial Performance and Outlook - Gross margin increased by 200 basis points to 49.8% in Q2 FY25, driven by reduced promotional activities, optimized product costs, and favorable channel mix [13] - Adjusted SG&A expenses decreased by 13% year-over-year to $530.1 million, aided by lower marketing expenses, headcount reductions, and insurance recovery [14] - The company expects a gross margin increase of 125-150 basis points for FY25, with adjusted SG&A expenses decreasing in the low to mid-single-digit percentage range [15] Industry Comparison - Under Armour's stock has gained 3.3% in the past six months, outperforming the Zacks Textile – Apparel industry's 4.2% decline [17] - Other top-ranked stocks in the industry include The Gap, Inc. (GAP), Abercrombie & Fitch Co. (ANF), and Deckers Outdoor Corporation (DECK) [18][19][20][21]