Under Armour Touts Five-Year Plan To Stabilize, Grow Company
Under Armour Founder, Chair & CEO Kevin Plank said that the company has "stabilized its North American business after the second year of a three-year reorganization and is ready to apply a revised strategy for growth to other parts of the world," according to Lorraine Mirabella of the BALTIMORE SUN. Plank: "We’ve gotten organized. ... We’re seeing these changes pay off and have a clear line of sight to what the transformation will yield." Plank's remarks kicked off the annual investor day, and execs gave "updates on long-term strategy, financial outlook and key initiatives." Those execs said that UA has "positioned a leaner, more efficient company for growth both in the United States and internationally, in places such as China, India, Mexico and Argentina, in sports such as running and training and among female consumers." A five-year growth plan will also "allow the company to return sales to a low double-digit growth rate" by '23, "improve profit margins and allow earnings per share to reach" a five-year growth rate of 40%. That plan "relies partly on data science and analytics," as well as reinvesting some of the $200M in "average savings from restructuring in areas such as marketing, international expansion and footwear development." Stifel analyst Jim Duffy said that he viewed the targeted sales growth rate of more than 7% over five years as "both manageable and conservative." But others were "more skeptical." CFRA Research analyst Camilla Yanushevsky "downgraded the stock" and "cut the 12-month price target" to $15/share. Mirabella notes shares of UA "fell more than" 10% yesterday (BALTIMORE SUN, 12/13). CNBCs Sara Eisen noted UA is up more than 10% since Q3 results in late October ("Squawk on the Street," CNBC, 12/12). At presstime, shares of UA were trading at $18.86 per share, down 4.8% from the close of business yesterday (THE DAILY).
AROUND THE WORLD: Plank and UA President & COO Patrik Frisk appeared together on CNBC this morning, with Plank noting the five-year plan is "transformational and it’s something which covers everything from structure to strategy to culture and we're incredibly proud of the progress.” Plank: “When you look into the fundamentals, they're there and we’ve got a very clear play, we’ve called the play and now it's a matter of execution, so that’s on us and we’ll let time tell.” Frisk: "We're moving from this North American-centric company into this global entity where we're going from a 25% share in North America and moving into 42% international.” Plank said of changing the culture at UA, “We're looking for a management team … that reflects the constituency that we're trying to sell to each and every day. I think we’re making great strides toward that. Again, we're not starting from zero. We have an amazing base right now, and so the way a story may play out is not always exactly the facts, so it's our job to communicate that story” (“Squawk on the Street,” CNBC, 12/13).
NOT SO FAST? WOMEN'S WEAR DAILY's Jean Palmieri wrote there is a "long road ahead to get back to the kind of skyrocketing growth" UA saw "only a few years ago" (WWD.com, 12/12). CNBC's Eisen noted Plank brought in Frisk to “help clean up the operating performance and margins." Eisen: “One of the biggest questions investors have is the relationship between those two. How much leverage does Frisk have? How much of a leash does he have to make some of these changes given that Plank is such a big, dominant personality?” (“Squawk on the Street,” CNBC, 12/12). CNBC contributor Pete Najarian noted UA is “weakening in North America (and) that's a huge problem.” CNBC contributor Tim Seymour said UA’s “best days are not only behind it, but the dynamic is they’ve had massive turnover in the executive ranks and this company is still actually looking for its way despite the fact that Kevin Plank is a constant and is as dedicated of a CEO as is out there” (“Fast Money,” CNBC, 12/12).