After strong Q3, Under Armour will use app data to learn about consumers, drive sales

By Jonah Comstock
Share

Sports apparel and connected fitness brand Under Armour reported revenue growth of 22 percent in the third quarter of the year, marking the company's 26th quarter of consecutive growth. While the main focus of the company's earnings call was on Under Armour's growing footwear business and international market expansion, CEO Kevin Plank also spoke about the growth of the company's Connected Fitness platform and how they continue to use connected fitness data to boost sales.

"Over the past three years, Under Armour is the only consumer brand in the top 10 fastest-growing companies in the S&P 500, with total revenue increasing 116 percent through 2015," Plan said on the call. "We have the capacity to lead our industry over the next 10 years by continuing to take our consumer someplace new with our constant flow of product and innovation, while at the same time improving their lives through our Connected Fitness platform, which will pass our 2016 goal of reaching over 190 million registered users by the end of this week."

During the quarter, wholesale revenues grew 19 percent to $1.01 billion, according to CFO Chip Malone on the call. Direct-to-consumer revenues grew 29 percent to $408 million, licensing revenues grew 21 percent to $29 million and Connected Fitness revenues grew 40 percent to $20 million.

Under Armour's growth comes in spite of the fact that brick and mortar sports apparel retailers Sports Authority, City Sports, and Vestis Retail Group, have all filed for bankruptcy over the last few years, a trend that's forced Under Armour to focus on direct-to-consumer sales. Plank spoke about how Connected Fitness -- the business unit created when Under Armour acquired three major fitness tracking apps a few years ago -- helps Under Armour improve sales.

"We firmly believe that going forward, brands without substantive communities will be at a deficit when it comes to building a relationship with our consumer," Plank said. "We are investing in our single view of the consumer through our partnership with SAP as we look to continuously drive a better business as we scale, knowing that much of the benefit will not be seen immediately."

The company has long positioned Connected Fitness as a longterm investment, but Plank said he does expect to start seeing the value reflected in sales soon.

"That said, we expect to see return on these investments starting in the near-term with tools like self-service consumer comparison reporting where we can quickly compare the demographic profiles, workout habits and purchase behavior of any group of consumers," he said. "We are growing our analytics capabilities and moving from backward-looking reporting to predictive and prescriptive analytics which allow us to establish and drive growth in a more meaningful way. We will be able to personalize our e-commerce homepage driving off your geographic profiles, which sport categories are important to you, your exercise, how frequently you exercise, sleep, weight, diet, and the make-up of your household. Going forward, we will continue to dive into the data and leverage the insights to deepen and expand our relationship with athletes as their needs change."