Under Armour plans to overhaul its wholesale partnerships, exiting between 2,000 and 3,000 stores in North America, according to company executives on a recent earnings call. The brand expects to be in approximately 10,000 stores by the end of 2022 as it shifts its toward direct-to-consumer (DTC) channels.
“I just want to make it very clear, we’re going to grow in North America,” Under Armour President and CEO Patrik Frisk said on the call. “I think that’s incredibly important to state. I think the composition of that growth is going to change over time.”
Under Armour joins other apparel brands, including Nike, in shifting toward DTC distribution. Brands are seeking more control over product distribution as well as more premium positioning with fewer promotions and discounts, thus creating better margins.
On the earnings call, the athletic brand reported flat revenue of $1.4 billion for Q3 compared to the same period last year. Wholesale revenue decreased 7% to $830 million, and DTC revenue increased 17% to $540 million, driven by continued growth in ecommerce. Additionally, the company announced that it has entered into a definitive agreement to sell the MyFitnessPal platform to private equity firm Francisco Partners for $345 million, with the deal expected to close in Q4.
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“Our third-quarter results reflect considerably better than expected performance due to higher demand and our strong execution, especially in North America,” said Frisk in a statement. “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.”
