Under Armour (UA) expects revenue to double to $7.5 billion by 2018, raising its long-term net revenue growth rate from 22 percent to 25 percent. The performance brand outlined its long-term growth plan on Wednesday at its biennial Investor Day meeting held at its headquarters in Baltimore.
To meet its target, UA said it plans to continue to expand its core businesses in apparel, North America and global wholesale, and place a greater emphasis on its “consumer-centric” sport category structure. The company believes these strategies will help drive growth in newer areas, including footwear, global direct-to-consumer and Connected Fitness, UA’s business unit dedicated to fitness apps, including MapMyFitness and MyFitnessPal.
At the meeting, UA also provided a long-term operating income target of $800 million, representing a 23 percent compounded annual growth rate from $354 million in 2014 and inclusive of UA’s Connected Fitness acquisitions in early 2015. The projection includes a consistent gross margin of approximately 49 percent as ongoing product margin opportunities and mix benefits from direct-to-consumer and Connected Fitness are offset by the higher mix of international and footwear businesses, the company stated.
As a result, SG&A expenses are expected to grow ahead of UA’s revenue trajectory through 2018 to support ramping growth segments in areas such as footwear and international, ongoing investment in Connected Fitness and global direct-to-consumer, as well as infrastructure investments to support the long-term growth trajectory and enable improved long-term efficiency.
In a statement, UA Chairman and CEO Kevin Plank, said, “For nearly 20 years, the Under Armour brand has been built on the promise to make all athletes better. Leveraging our foundation in innovation and enhancing the connectivity of our brand with consumers through Connected Fitness, we are better positioned than ever before to exceed consumer expectations as we evolve from a brand dedicated to changing the way athletes dress to one that will change the way athletes live.”
He concluded, “Our vision to change the way athletes live requires that we also change the way we operate. We are in a unique time in our Company’s history with unprecedented brand momentum providing a much longer and wider runway of opportunity than ever before. With this visibility, we are moving decisively to take advantage of this moment in time and deploy resources that will drive near-term results, but more importantly, position us for success well beyond our 2018 targets.”