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Under Armour Comeback Is Fueled by Lower Ambitions

At Under Armour (NYSE:UAA, NYSE:UA), less is finally more. UAA stock is up.

the exterior of an Under Armour store
Source: Sundry Photography /

The Baltimore sportswear company, which once promised to rival Nike (NYSE:NKE), went back to its niche during the pandemic. By offering what it calls performance athletic clothing at full price, it’s growing again and profitable.

It has been a long struggle.

Under Armour sales were 8% lower in fiscal 2020 than in 2016. But the second quarter report, released Aug. 3, made analysts like John Kernan of Cowen look like geniuses. He predicted a 53% gain in the stock in June and 18% has now been realized.

How They Did It

Under Armour got into trouble chasing growth during the 2010s. It lost distribution when chains like Sports Authority closed and tried to compensate by selling its goods wherever it could. The result was a lot of clothing piled on tables at discounters, and a negative brand image.

Patrik Frisk, who finally took the CEO chair from founder Kevin Plank in early 2020, used the pandemic to reverse course. He exited 3,000 stores sold the MyFitnessPal app to private equity, and pushed sales through the chain’s own stores.

Frisk has been able to scale back Plank’s vision in other ways. An office complex it was building at Port Covington, near Baltimore’s harbor, was scaled back. Plank had bought the 50-acre site in the middle of the 2010s when Under Armour was worth more than Lululemon Athletica (NASDAQ:LULU). (It’s now worth about one-sixth of the yoga brand.) The complex will still feature playing fields and a regulation track, which it calls a testing ground. But it will have 40% less office space and the fields will be usable by the city for games and special events.

Frisk also cut sports sponsorships by 50%. He ended deals with the NFL and major college teams. He also renegotiated deals with top-name athletes like Stephen Curry, Tom Brady, and Bryce Harper.

Next Steps

The moves have gotten analysts back on the side with the stock, with eight of 14 now rating it a buy.

JPMorgan Chase sees the stock hitting $30 per share by the end of 2022. Shares are currently at $25, but were at the equivalent of almost $42 per share five years ago.

The company has benefited from people working at home in comfortable clothes. Sportswear is expected to keep growing at an 8% pace through 2025. By restricting distribution, Under Armour has been able to sell more merchandise at full price. The second quarter beat estimates on both the top and bottom lines. The company also raised full-year estimates.

But Under Armour’s return on equity is still low and its strategy from here reads like gobbledygook. Innovation and faster go-to-market strategies? What does that mean? The NBA’s Curry standing behind a golf brand? Actress Eva Longoria in flaming hot yellow sneakers?

The Bottom Line for UAA Stock

Plank still controls Under Armour. He switched the company to a dual-share structure where he holds voting control, back in 2017. When he was CEO, a legend in his own mind, this made sense.

Now it makes no sense. You can’t buy UAA stock as an arbitrage play because Plank can’t be moved out, even though he’s not really in. Most of Frisk’s work has involved cutting expenses, thus cutting ambitions, thus cutting the possibility of future growth.

Under Armour today is a niche activewear brand. That’s what it was early in the last decade, too. But then it had ambitions, big plans to take on the industry leaders. Now it just wants to make money.

It can make money. Just not a whole lot of it.

On the date of publication, Dana Blankenhorn held no positions in companies mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Living With Moore’s Law: Past, Present and Future available at the Amazon Kindle store. Write him at or tweet him at @danablankenhorn. He writes a Substack newsletter, Facing the Future, which covers technology, markets, and politics.

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