Effective operational strategies and sturdy growth in the digital realm has been adding sheen to Under Armour, Inc. UAA. Markedly, the company is witnessing strong e-commerce sales, which is supporting growth in the direct-to-consumer (DTC) channel. Additionally, this well-known athletic apparel, footwear and accessories company’s effective brand strategies, product innovations and efforts to boost international footing have been yielding. Such prudent measures have been helping the company meet demand conditions effectively. Markedly, shares of this Zacks Rank #2 (Buy) stock have increased 16.6% in the past six months compared with the industry’s rise of 8.6%.
Strong Online Wing Acts as a Key Catalyst
Consumer’s inclination toward digital transactions, especially amid the pandemic, has served as an advantage for several retail players. During first-quarter 2021, Under Armour witnessed 69% jump in e-commerce sales. This also supported revenue growth in the company’s DTC channel. During the quarter, the company’s DTC channel witnessed a surge of 54% to reach $437 million. Markedly, the company’s e-commerce business contributed approximately 45% to its total direct-to-consumer business. Under Armour continues to focus on boosting digital capabilities to drive growth in the DTC channel. Additionally, its DTC business is gaining from growth in owned and operated retail stores.
Other Growth Efforts
Under Armour is progressing well with its multi-year transformation plan. Its long-term growth strategy is focused on improving sales through product innovation, investments in stores and digitization as well as selling more inventory at full price. Additionally, the company is focused on strengthening its brand through enhanced customer connections and strict go-to-market process. It is also focusing on expanding assortments across key categories including training and running. Apart from these, the company is striving to curtail costs and support margins.
Also, the company’s international business is doing well. Revenues in the international unit increased 57.8% (or up 50.2% on a currency-neutral basis) to $452 million during the first quarter of 2021. Within the international unit, net revenues from Asia-Pacific and EMEA increased 119.7% and 40.6% to $210.2 million and $193.9 million, respectively. The company continues to seek opportunities for expanding its global footprint and market share.
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Under Armour’s strong brand image and offerings, solid market presence as well as efficient e-commerce business should continue aiding its performance. Markedly, the company has provided an optimistic view for fiscal 2021. Management anticipates full-year 2021 revenues to increase at a high-teen percentage rate, up from the prior projection of high-single-digit percentage rate increase. The raised top-line view reflects a high-teen percentage growth rate in North America and low-thirties percentage growth rate in the international business. In respect of second-quarter 2021, the company expects revenues to rise 70% year over year.
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