Under Armour CEO on company’s quarterly earnings

CNBC Television published this video item, entitled “Under Armour CEO on company’s quarterly earnings” – below is their description.

Patrik Frisk, Under Armour president and CEO, joins ‘Closing Bell’ to discuss the company’s quarterly earnings, the future of the business and the state of retail. For access to live and exclusive video from CNBC subscribe to CNBC PRO: https://cnb.cx/2NGeIvi

Under Armour said Wednesday it is forging ahead with its turnaround strategy to pull its sneakers and sweat-wicking tops out of struggling middlemen and instead pour investments into its own stores and website.

Investors rallied behind management’s remarks about the future, with Under Armour shares soaring more than 8% in afternoon trading, and touching a 52-week high of $23.23 at one point. Earlier Wednesday, the company reported fourth-quarter earnings and sales that not only topped Wall Street expectations but showed an unexpected profit.

Under Armour revealed plans late last year to break with some retailers, primarily in North America, starting in the back half of 2021, as it doubles down on its strategy to sell more directly to consumers. It has said it aims to leave 2,000 to 3,000 partner stores, although that would still leave it with 10,000 by the end of 2022.

“That will be a two- to three-year journey for us,” CEO Patrik Frisk told analysts during a post-earnings conference call. “And what we’ll be left with, when we’re through that journey, is really what we believe are more appropriate doors for us — doors that we feel are going to win.”

The company didn’t identify which retailers it will break ties with as part of this plan. Under Armour’s merchandise is sold in a number of U.S. department stores, specialty sporting goods stores and off-price retail locations, in addition to mom-and-pop businesses.

In 2020, Under Armour said wholesale revenue fell 25% to $2.4 billion, while direct-to-consumer sales rose 2% to $1.8 billion, driven by a 40% gain in e-commerce sales. Digital made up about 47% of direct-to-consumer revenue last year, the company said.

“The reality is, the company is showing restraint and conservatism because they recognize the need to grow healthy and not rapidly,” BMO Capital Markets analyst Simeon Siegel said in an interview. “The idea that a brand will grow to the moon and sell anywhere is a thing of the past. And the retailers that relied on them … will have to look inward.”

Frisk said the strategy will help Under Armour ultimately have a more premium position in the marketplace, while also allowing it to sell more inventory at full price, which also should help boost profits.

Analysts have chastised the company for selling too much merchandise through other retailers, which often ends up marked down and dilutes the brand’s value.

Several retail brands, including Coach owner Tapestry and Levi Strauss & Co., have embarked on a similar path — some more successfully than others. The switch is still underway for some. The transition has taken place as more consumers are buying online and paying fewer visits to shopping malls — a trend that has weakened sales at department stores. And these trends have accelerated during the Covid pandemic.

Nike offers one of the best examples. Its direct-to-consumer revenue represented about 35% of its total sales for the brand in fiscal 2020, compared with 32% in fiscal 2019.

“The way that we think about our distribution model … is really through the eyes of the consumer,” Under Armour’s Frisk said. “So the way that Under Armour drives our decisions around where we should be, when we should be there, how much we should have … our growth in the future comes with the consumer.”

With Wednesday’s stock gains, Under Armour shares are up about 10% from a year ago, bringing its market value to $10.3 billion.

» Subscribe to CNBC TV: https://cnb.cx/SubscribeCNBCtelevision

» Subscribe to CNBC: https://cnb.cx/SubscribeCNBC

» Subscribe to CNBC Classic: https://cnb.cx/SubscribeCNBCclassic

Turn to CNBC TV for the latest stock market news and analysis. From market futures to live price updates CNBC is the leader in business news worldwide.

The News with Shepard Smith is CNBC’s daily news podcast providing deep, non-partisan coverage and perspective on the day’s most important stories. Available to listen by 8:30pm ET / 5:30pm PT daily beginning September 30: https://www.cnbc.com/2020/09/29/the-news-with-shepard-smith-podcast.html?__source=youtube%7Cshepsmith%7Cpodcast

Connect with CNBC News Online

Get the latest news: http://www.cnbc.com/

Follow CNBC on LinkedIn: https://cnb.cx/LinkedInCNBC

Follow CNBC News on Facebook: https://cnb.cx/LikeCNBC

Follow CNBC News on Twitter: https://cnb.cx/FollowCNBC

Follow CNBC News on Instagram: https://cnb.cx/InstagramCNBC




CNBC Television YouTube Channel

Got a comment? Leave your thoughts in the comments section, below. Please note comments are moderated before publication.

About This Source - CNBC Television

CNBC is an American pay television business news channel, which primarily carries business day coverage of U.S. and international financial markets. Following the end of the business day and on non-trading days, CNBC primarily carries financial and business-themed documentaries and reality shows.

As of February 2015, CNBC is available to approximately 93,623,000 pay television households (80.4% of households with television) in the United States.

Recent from CNBC Television:

  • Former FDIC Chair Sheila Bair is teaching children about money
  • 13,000 Haitian migrants cross into Texas
  • Security very tight around U.S. Capitol ahead of far-right rally
  • In This Story: COVID-19

    Covid-19 is the official WHO name given to the novel coronavirus which broke out in late 2019 and began to spread in the early months of 2020.

    Symptoms of coronavirus

    The main symptoms of coronavirus are:

    • a persistent new cough (non productive, dry)
    • a high temperature (e.g. head feels warm to the touch)
    • shortness of breath (if this is abnormal for the individual, or increased)

    Latest News about Covid-19

    Below are stories from around the globe related to the 2020 outbreak of novel Coronavirus – since the WHO gave the Covid-19 naming. Most recent items are posted nearest the top.

    5 Recent Items: COVID-19

  • Artist honors lives taken by COVID-19 with white flag exhibition
  • Kristoffer Broberg shoots 61 to lead by EIGHT shots | Round 3 Highlights | 2021 Dutch Open
  • Over 600.000 white flags displayed to honor COVID-19 victims Washington DC
  • Doctor holds counter-protest against demonstrators targeting hospitals
  • California’s Recall Election, Nicki Minaj’s Viral Vaccine Tweet: This Week’s News | The Tonight Show
  • Leave a Comment

    We don't require your email address now, just your name. BUT, if you do add it, you may be notified if there are replies to your comment. Please make respectful comments, which add value, and avoid personal attacks on others. Comments failing to adhere to these guidelines will not be published.