After a strong quarter that saw the sale of its fitness platform, Under Armour (UAA) is set to “compete in a major way” in 2021, the sports apparel and footwear company’s CEO told Yahoo Finance on Friday.
Under Armour’s stock popped by over 1% Friday, after the sportswear company reported better-than-expected third-quarter results and its plan to sell its MyFitnessPal app to a private equity firm. All told, the shares are now nearly 50% higher than its 52 week low at $6.37.
Patrik Frisk, a 30-year retail veteran, joined Under Armour in 2017 after serving as CEO of The ALDO Group, taking over the top spot at Under Armour from founder Kevin Plank. He’s been at the forefront of the Baltimore-based company’s turnaround strategy and transformation.
“We’re going to grow both top-line and we’re going to be profitable again,” Frisk told Yahoo Finance in a wide-ranging interview.
Frisk acknowledged that there are some headwinds, including selling its MyFitnessPal platform and exiting a number of wholesale stores in North America, that are “balancing out” that acceleration.
“Make no mistake — Under Armour is a growth company. We are going to compete again in a major way in 2021,” the executive added. As COVID-19 reshapes consumer behavior, Frisk said Under Armour’s strong quarter is just the beginning for its growth ambitions.
“As a brand, it’s important as a brand to stand for something. And we’ve done a lot of soul-searching as well as a lot of consumer insights,” he said. “It’s become clear that Under Armour is a performance brand. The consumer believes us as a performance brand.”
According to Frisk, narrowing the focus to being a performance brand provides space in the market for Under Armour to grow again, generating a “halo” in other areas. Part of the short-term strategy is narrowing the company’s focus and slimming down operations.
Online vs. brick and mortar
On its earnings call Friday, Under Armour said it intends to exit 2,000 to 3,000 wholesale stores in the next few years, but didn’t provide specific names. That said, Frisk does see a role for brick-and-mortar stores, just not as many.
The evolution will involve a smaller footprint in North America, the CEO argued, “because I think North America is over-skewed from a retail footprint perspective in terms of square footage that’s available out there. You’re going to see a decrease in physical retailing.”
According to Frisk, the consumers want a variety of options, and the in-store experience is important, from pick-up and return to seeing and feeling the product.
“There’s a role the physical retail store has. The question is ‘to what extent?’ The question is also, ‘Where?’” he told Yahoo Finance. “And, there’s no question in our mind that the digital marketplace will continue to grow, but we still believe that a combination of the two.”
He emphasized that wholesale is still important because “there are certain places we can’t reach but the consumers expect us to be. By being consumer-centric, we’ll understand when, where, and how we should be meeting the consumer’s expectation.”
Farewell to MyFitnessPal
Under Armour’s decision to jettison its MyFitnessPal platform to tech-focused private equity firm Francisco Partners for $345 million raised some eyebrows.
The fitness app, where users can log and track fitness goals, workouts, and nutritional information, hosts around 200 million users. Under Armour acquired Endomondo and MyFitnessPal in February 2015 for a reported $475 million. At the time, MyFitnessPal had more than 80 million registered users.
Frisk acknowledged that MyFitnessPal “has certainly been a growth engine to some extent” and did a “good job on the nutritional side,” but it didn’t fit with Under Armour’s target consumer — the focus performer.
Frisk added that MyFitnessPal has a “great future” and that he thinks the app will “do better on their own and driving their strategy going forward.” He called the deal a “win-win in terms of what’s next for both of these two different apps.”
Saying Under Armour “learned a lot” about data from the 2015 deal, Frisk added that data from the related MapMyFitness app “aligns more with the company strategy of one ecosystem going forward. So, we’re going to keep MapMyFitness and make that the core of our Under Armor ecosystem going forward.”
MyFitnessPal and MapMyFitness falls under a connected fitness segment that posted revenue of nearly $37 million in the quarter, accounting for a large portion of Under Armour’s bottom line.
“We’ve learned a lot as I’ve said in terms of what we can and can’t do with data and how it works, “ the CEO said. “We just feel at this point in time to be able to really maximize any app or any digital ecosystem, it needs to be focused. You need to truly understand what you’re going after and what you’re offering.”
Julia La Roche is a correspondent for Yahoo Finance. Follow her on Twitter.
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