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Under Armour sells more online and direct to customers as wholesale revenues fall

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Under Armour today reported a 17% lift in direct-to-consumer sales in its third quarter as shoppers bought direct from the sportswear brand. As a result, its direct sales reached $540m (£411m) but revenues in its larger wholesale business fell by 7% to $830m (£631.6m). 

Overall, Under Armour’s revenues across all channels for the three months to September 30 stayed flat at $1.4bn (£1.1bn) compared to the same time last year. Under Armour is ranked Top250 in RXUK Top500 research.

At the same time, revenue in its North America domestic market fell by 5% to $963m (£732.7m), but international sales grew by 18% to $433m (£329.5m). The fastest international growth was in its EMEA segment (+31%), while sales in Asia Pacific were also up (+15%) but sales fell in Latin America (-15%). 

Profit margins declined, however, by 40 basis points to 47.9% as the brand discounted in the face of Covid-19. However, this, said the brand, was partly offset by supply chain efficiencies and through its use fo different sales channels. Net income fell to $38.9m (£29.6m) in the latest quarter from $102.3m (£77.8m) at the same time last year. 

That took net sales in the first nine months of the year to $3.1bn (£2.4bn), down from $3.8bn (£2.9bn) last time, while net income fell to a loss of $733.6m (£588m) over the same period – from a profit of $107.4m (£81.7m) last time.

“Our third-quarter results reflect considerably better than expected performance due to higher demand and our strong execution, especially in North America,” said Under Armour president and chief executive Patrik Frisk. “We believe that the critical mass of our transformational challenges is behind us, and we remain sharply focused on operational improvements and financial discipline to accelerate strategies to create sustainable, long-term growth for the Under Armour brand and our shareholders.”

Pippa Stephens, retail analyst at data and analytics business GlobalData, said: “A considerable focus on its online proposition has been extremely advantageous for Under Armour, with strong digital growth driving its direct-to-consumer revenue to increase by 17%. Its fast and convenient delivery options will have been particularly desirable while shoppers resisted visiting shops, and detailed product descriptions and fit guides will have given shoppers more confidence to make purchases via the channel.”

She added: “Its international business has managed to rebound more effectively, particularly in EMEA, where many countries have recovered from the pandemic more successfully than the US. The retailer has also had a marked focus on this territory over the past couple of years, having opened new headquarters in Amsterdam in 2019, as well as a new warehouse in the UK to allow it to provide a more convenient service following Brexit. Under Armour should apply its learnings from its smaller, faster recovering markets to its US proposition, to enable it to bounce back with more vigour next year.”

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