Under Armour Q3 tops Street; to exit up to 3,000 wholesale doors, sells fitness app

Under Armour’s turnaround is starting to take shape.

In addition to reporting better-than-expected third-quarter results, the athletic apparel, accessories and footwear company said it is selling its MyFitnessPal platform to Francisco Partners for $345 million.    

“As part of our ongoing transformation, we are committed to actively managing our business to ensure that our strategies and assets are prioritized to connect even more deeply with our target consumer – the focused performer," said Under Armour president and CEO Patrik Frisk. "This announcement reduces the complexity of our consumer's brand journey by empowering sharper alignment with our long-term digital strategy as we work towards a singular, cohesive UA ecosystem.”

In conjunction with the sale, Under Armour said it would discontinue its Endomondo platform's operations at the end of 2020. 

Under Armour is also cutting back on the number of stores that sell its products. On the company’s quarterly conference call, executives told analysts that Under Armour would exit between 2,000 and 3,000 wholesale doors in North America. 

Following two consecutive quarters of losses, Under Armour reported that its net income totaled $38.9 million, or $0.9 per share for the quarter ended Sept, down from $102.3 million, or 23 cents a share, in the year-ago period. Adjusted earnings per share came in at $0.26, topping expectations for $0.03 cents. 

Revenue was about flat, at $1.43 billion, from a year earlier, topping estimates for $1.16 billion. Under Armour’s direct-to-consumer business, which includes sales from its website and stores, rose 17% over last year.

In North America, revenue fell 5% to $963 million. International sales increased 18% to $433 million. Global online sales increased more than 50% during the quarter.

"Our third-quarter results reflect considerably better than expected performance due to higher demand and our strong execution, especially in North America," said Frisk. "We believe that the critical mass of our transformational challenges is behind us, and we remain sharply focused on operational improvements and financial discipline to accelerate strategies to create sustainable, long-term growth for the Under Armour brand and our shareholders."