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Under Armour (UAA) Growth Strategies Aid: Should You Hold?

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Under Armour, Inc. (UAA - Free Report) is performing impressively on bourses, thanks to its robust business strategies. The company’s focus on strengthening its brands through enhanced customer connections, effective innovations, better price points and a loyalty program should help it to hold the ground firmly in the current challenging market.

Markedly, shares of this athletic footwear, apparel and accessories dealer have increased 27.5% over the past six months, outperforming the industry’s 17.4% rise. The stock has a Zacks Rank #3 (Hold) and a VGM Score of B. In addition, analysts look optimistic about the company.

The Zacks Consensus Estimate for fiscal 2024 sales and earnings per share is currently pegged at $6.13 billion and 62 cents, respectively. These estimates show corresponding increases of 4.5% and 15.3% year over year.

Let’s Delve Deeper

Under Armour has been progressing well with its multi-year transformation plan. The company is focused on strengthening its brand through enhanced customer connections, effective innovations and strict go-to-market process. The company strives to boost its operating model as well as return greater profitability and value to shareholders.

The company’s long-term growth strategy is focused on improving sales through product innovation, building long-term relationships with key wholesale partners, investments in own stores and digitization to directly reach customers and selling more inventory at full price.

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The company is focusing on digitization by converting real-time data and analytics to drive brand interest and consideration within its largest categories of training and running. Under Armour also initiated a new loyalty program in North America, UA Rewards, on a pilot basis. Restructuring initiatives, cost management, inventory balance and emphasis on productivity should position Under Armour for growth.

Under Armour has been trying to boost its direct-to-consumer business through store-expansion initiatives and enhancement of its e-commerce platform. Management has been investing in boosting the digital capabilities to drive growth in the direct-to-consumer channel. This includes buy online and pick up in store facility and flexible payment capabilities.

Furthermore, UAA continues to seek opportunities for enhancing its global footprint and market share. Though the company generates major portion of its revenues from the North America region, it intends to expand business operations to other parts of the world.

Revenues from the international business increased 14.2% (up 24.4% on a currency-neutral basis) to $547 million during third-quarter fiscal 2023. Within the international business, net revenues from the EMEA jumped 32.5% to $265.3 million. Revenues from the Latin American region grew 44.9% to $63.8 million.

For fiscal 2023, Under Armour continues to foresee low-single-digit growth in fiscal 2023 revenues. On a currency-neutral basis, management expects revenues to be up at a mid-single-digit-percentage rate.

The company raised its adjusted earnings view in the band of 52-56 cents per share, up from the previously guided range of 44-48 cents a share on gains from positive FX developments on the other income and expenses line coupled with a marginally lower tax rate. For the current fiscal year, SG&A expenses are anticipated to be down in the low single digits compared with a slight decline expected earlier.

Wrapping up, Under Armour is well poised for future growth based on the aforementioned strengths.

Solid Consumer Discretionary Bets

Here we have highlighted three top-ranked stocks, namely, Ralph Lauren (RL - Free Report) , Oxford Industries (OXM - Free Report) and Deckers (DECK - Free Report) .

Ralph Lauren, a footwear and accessories dealer, sports a Zacks Rank #1 (Strong Buy) at present. RL has a trailing four-quarter earnings surprise of 23.6%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Ralph Lauren’s current financial year sales and EPS suggests growth of 5.5% and 14%, respectively, from the year-ago corresponding figures.

Oxford Industries designs, sources, markets and distributes lifestyle products. It currently carries a Zacks Rank #2 (Buy). Oxford Industries has a trailing four-quarter earnings surprise of 18.9%, on average.

The Zacks Consensus Estimate for OXM’s current financial year sales and EPS suggests growth of 13.7% and 10.4% from the year-ago reported numbers.

Deckers, a footwear dealer, has a Zacks Rank of 2 at present. DECK has a trailing four-quarter earnings surprise of 31%, on average.

The Zacks Consensus Estimate for Deckers’ current financial year sales and EPS suggests growth of 11% and 17.1%, respectively, from the year-ago corresponding figures.

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