Under Armour 3Q16 Earnings Call Notes

Under Armour (UA) Q3 2016 Results

Our business is about more than athleisure

“Our industry of sport is different. Our industry’s growth opportunities are global with consumers around the world embracing athletic apparel and footwear at its historic levels. It’s not about what people are conveniently referring to as athleisure is the simple truth that consumers all over the world are raising expectations about what to expect from their apparel and footwear and it’s a shift that is not going to be reversed.”

Three strategic initiatives going forward

“recently I pulled together the top leaders in the company and discussed the strategic growth and direction of Under Armour. We came away with three key areas of focus that I want to share with you today. First, getting big fast. Second, making retail a core competency. And third, getting more shoes on feet. ”

Growth gives us the ability to move up in weight class

“As I said earlier, we have succeeded over the past 20 years by consistently punching above our weight and that will not change. But our growth now gives us opportunities to move up in weight class and we find ourselves well-positioned at this moment in time to compete for long-term relationships with athletes, teams and league affiliations that we previously could not justify.”

Need to build a business as big as our brand

“we talked about building a business as big as our brand. We’ve had our eye on $10 billion, that’s the way that we see our company, I think it’s the way that people view and judge us with $7.5 billion being our next milestone to be hit by 2018. And again, we want to reiterate that we’re on track to hitting that goal.”

We still only have half as many points of distribution in the US as our two largest competitors

“I want to give some perspective here for a second just on where we are. I mean, Under Armour’s – we got dropped into the sporting brand pond about 20 years ago. And we jumped in and there were a lot of players, 20 players, 30 players or brands as many as you want. Today, we’re the third-largest brand in the world. We’re the second largest brand in North America. And our two largest competitors have more than 20,000 points of distribution each in North America alone compared to just our 11,000, which speaks to just some of the runway that we still have in front of us right here in our own backyard. They are also six times and four times our size respectively.

Chip Molloy – Under Armour, Inc.

Margin will come with scale

“As we start to get to $10 billion, there’s a couple things that will happen. One, the gross margins, we should start to get expansion on the gross margins and we’ll start to get that because we won’t be faced with as much of a mix shift that we’re faced with today and the improvements we’re seeing on the cost side of the house, we are seeing those today and they’ll continue; but over time, as we start to gain more and more scale, we’ll see that gross margin improvement. And on top of that as we get more into lifestyle, we’ll see more gross margin as well. So, once we start to get towards $10 billion we’ll see gross margin.”