Like many a championship-winning team, US sports apparel firm Under Armour is finding it performs better when playing away from home.
The company credited with developing moisture-wicking clothing had a tough year at home in 2017, with a 5 percent drop in revenue in the final quarter. That was especially hard to swallow as German rival Puma increased its US sales by 6 percent in the same period.
But the silver lining is that Under Armour’s shirts, shorts and sneakers are selling well in Europe and Asia. Fourth-quarter revenues jumped 45 percent in Europe and 55 percent in Asia.
In the important German market, the relatively young brand has a strong reputation and retailers have been showering the company with praise. Kim Roether, the head of Intersport, Germany’s biggest sports retailer, said Under Armour’s product ranges were good and its cooperation was exemplary.
Both Puma and Adidas are poaching business from their American rivals in the world’s most important sports market.
The firm jumped from 24th to 14th place in the ranking of Intersport’s biggest suppliers last year, he added. Just four years ago, it wasn’t even among the retailer’s top-selling 60 brands. It illustrates how much better the company is doing abroad than in America.
Foreign revenue only makes up a quarter of Under Armour’s total sales, but those gains enabled the group to exceed analysts’ forecasts. Its shares jumped 15 percent to $15 on Wall Street Tuesday. In mid-2015, they had been trading at close to $100.
They lost around a third in 2017, when the founder and head of the company, former football player Kevin Plank, launched a restructuring, sacking executives, closing outlets and shedding more than 200 jobs. The cost of the measures pushed Under Armour into the red after it had made a profit of almost $200 million in 2016. Full-year revenue rose 3 percent to $5 billion, which was in line with forecasts but well below its past performance of double-digit growth.
“In 2017, we were a noisy company and a quiet brand,” said Mr. Plank. “In 2018 we want to be a quiet company and a loud brand”.
German competitor Adidas hasn’t published its fourth-quarter results yet. But its sales in North America jumped 27 percent in the first 9 months. Evidently, both Puma and Adidas are poaching business from their American rivals in the world’s most important sports market. However, of the top ten sneakers sold in the country last year, only Adidas made the list, claiming two spots. Nike had the other eight.
Under Armour’s investors will need to be patient. Mr. Plank predicted low-single-digit revenue growth for 2018 and a modest operating profit of $30 million. He plans to expand sales through e-commerce and to focus the product ranges on jogging and fitness products.
Joachim Hofer covers the sports, leisure and IT sectors for Handelsblatt. Katharina Kort is a Handelsblatt reporter based in New York. To contact the authors: email@example.com, firstname.lastname@example.org