The task before the UA is still daunting. Last year, UA set a target of $7.5 billion in revenue by 2018, compared with only $2.05 billion in the first half of this year. The time is tight and far from the goal, UA still needs to hurry.
Under Armour, the up-and-coming American sports brand, has attracted many people's attention because of the near-crazy growth rate in the past two years. Especially in his own US base camp, even Nike has to look at this competitor. However, in the recent period, Under Armour also began to worry about its own performance, in the highly competitive sportswear market, does not allow for the slightest negligence.
Last week, UA announced its financial report for the second quarter of this year. Although the performance from the perspective of revenue is acceptable, the revenue of 1 billion US dollars has increased by 28% compared with the same period of last year, and it has also reached market expectations. And UA's revenue has also made good gains in both local and overseas markets. Everything looks beautiful and is still the usual UA rhythm.
However, hidden data on the surface of the bright data is hidden, because in the quarter, UA's net profit plummeted from $ 13.76 million in the same period last year to $ 6.34 million, a decline of 57%; operating profit also fell by 39% to 19.37 million US dollars. It can be said that it hasn't been seen in UA for a long time.
The bankruptcy liquidation of sporting goods retailer Sports Authority has had a major impact on UA. As one of the major providers of Sports Authority, UA had to pay up to US$23 million in impairment charges for its bankruptcy liquidation, which also affected UA’s profitability in the last quarter or even throughout the year.
In addition, the failure of the Sports Authority has forced UA to spend more on channel sales, which is a new beginning for UA, and it will eventually take some time to adjust. In fact, it is not difficult to understand that in the last quarter, UA showed sufficient strength in its revenue capacity, but why did the profit decline so severe? There is only one reason, that is, a substantial increase in expenditure.
However, from the UA's point of view, such results cannot of course be seen merely as an accident. In fact, UA's revenue growth has started to slow in the previous quarter. In the first quarter of this year, UA's revenue growth could still exceed 30%, but in the second quarter, this figure was further reduced by 2.5 percentage points. This is not a positive signal. Of course, this pot cannot be completely backed by the Sports Authority's bankruptcy.
The most serious problem is the clothing category. The income of this category accounts for more than 60% of the total income of UA. However, in the last quarter, the income growth of this category has fallen below 20% for the first time in more than seven years. 18.9%. Even UA's killer footwear products are not spared. Although more than US$240 million in sales has increased by 58% from the same period of last year, there are still significant gaps compared to 94.5% and 64.2% in the previous two quarters.
It is important to know that between April and June, when the NBA regular season ends and the playoffs and the finals take place, the Warriors record a regular season record and Curry's regular season MVP boost, plus this year's finals The high degree of attention, this should be the best time to sell UA basketball shoes, but obviously this increase is still slightly lower than market expectations.
The crisis exists, but we don't have to swear too much Under Armour. The closure of the Sports Authority did have a huge impact on the North American sporting goods market. It was an important period for the North American market to go into inventory from April to June. As a result, the inventory backlog and narrowing of sales channels were enough to make any brand crazy. More than UA, Nike's days in this period is not too good, because in the North American market, Nike's dependence on the Sports Authority is far better than UA. In the fourth quarter of fiscal 2016, Nike’s profits declined significantly. Even in the first quarter of fiscal 2017, Nike’s performance expectations were difficult to satisfy investors.
However, the current UA and Nike is clearly not much comparable, because Nike has a huge overseas market as a support, and for the main battlefield on the local UA, the work to be done even more. Fortunately, UA has early warnings. From the second half of 2016, every step is crucial for UA.
The trickiest issue before UA is naturally expanding sales channels. Without the employment of the Sports Authority, UA needs more opportunities to engage its products with consumers. According to the group, starting from March 1st of next year, UA will enter the US department store retailer Kohl's Corp. in more than 1,100 stores nationwide. In this way, UA greatly expands its sales coverage and enables people from all walks of life to learn about their brand at close range. What's more, UA must start to break its own image of movement inherent in people's hearts. It is also crucial for sports brands to be more living and more grounded. According to Morgan Stanley analysts, cooperation with Kohl's Corp. will create $190 million in sales revenue for UA next year.
In addition, UA also plans to open the store to Fifth Avenue in Manhattan, New York, and this store will also be UA's largest retail store in the world. The location of the new store is also very elegant. UA selected the former site of FAO Scwhaz, a famous piano toy brand in New York, as its base area on Fifth Avenue. This long-established piano toy brand once built a huge piano doll on Fifth Avenue, which also made it an alternative landmark in the area. UA naturally values ​​the high popularity here and hopes this store will be able to create its own competitiveness in the retail sector.
However, this store is currently still in the internal design and development positioning and planning stage, Under Armour said that the store will be the fastest to meet consumers in early 2019. In addition to the retail of goods, this store also carries the important task of delivering brand culture.
Contrary to the two American brands, Adidas and Hummer have all benefited greatly in the second quarter of this year. Among them, Adidas has raised its full-year performance forecast four times in less than half a year, and Puma has achieved profitability in the last quarter. In addition to the European Cup, combined with fashion, overweight the female market is also a decisive move. Competitors pointed to a clear road, UA naturally can not remain indifferent. Please come to Ralph Lauren, senior designer Adidas Tim Coppens as the design director of the new product line UAS is a good start. As for the market response, it can only be seen until the fall.
The lack of development of UA in the Chinese market has been criticized. Now they are finally determined to flex their muscles. According to the "Wall Street Journal" report, UA plans to open 120 stores in China before the end of this year. Although Adidas and Nike can't compare with each other, it is a huge improvement for itself.
Last month, UA also brought the Armour Roadshow roadshow to China for the first time. The event has set foot in 10 cities across the country, including Beijing and Shanghai. UA has created a panoramic exhibition area in the central business district of these cities, where consumers can learn more about the brand story, experience the latest sports equipment, and participate in real professional themed training.
In the Chinese market, consumers' awareness of UA's brand is not strong, and because of the competition, UA wants to quickly gain popularity here. It really takes more brains. The Armour series has always been the flagship product of UA, and its distinctive features make it perfect for using it as a publicity leaderboard. It is reported that the roadshow will also go to more cities and open women's special events. Since UA has fallen behind in China, raising brand awareness at the earliest possible speed is what UA currently needs to do most.
Increasing the number of stores, expanding the Chinese market, and attracting female users are the three magic weapons that UA has to solve the immediate difficulties. However, these are not ways to see benefits in a short period of time. On the contrary, this will greatly increase UA's financial expenditures. increase. It seems that UA wants to restore the once high profit growth and needs to go through a period of time. Indeed, the task before the UA is still daunting. Last year, UA set a target of $7.5 billion in revenue by 2018. In the first half of this year, this figure was only $2.05 billion. The time is tight and far from the goal, UA still needs to hurry.
Source: Sui Tang Sports
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