Under Armour founder eyes expansion in the Middle East

Chief operating officer says US sports retailer wants to boost global business to account for half of total sales

Under Armour founder and chief executive officer Kevin Plank (left) and president and chief operating officer Patrik Frisk (right) were in Dubai as part of a world tour to focus on international expanShow more

Under Armour, the US sports retailer designing suits for Virgin Galactic pilots, wants to expand its international business to account for half of total sales while shifting production away from China to other countries, said its top executives.

"[We're] focused on new markets, as well as some new places where we've been doing business," Kevin Plank told The National in an interview in Dubai on Saturday.

Among its international plans are opening seven new stores in the Middle East this year.

Under Armour’s revenue grew 4 per cent last year to reach $5.2 billion. However, there was a marked difference between the North American and international markets: North American revenue was down 2 per cent, while international business was up 23 per cent.

International growth was “driven by continued growth in EMEA [Europe, Middle East and Africa] and Asia Pacific,” Mr Plank said during an earnings call in February. In the fourth quarter, EMEA revenue was up 32 per cent and Asia Pacific was up 35 per cent.

In its five-year plan outlined to investors in December, Under Armour said it would increase its share of international sales from 25 per cent to 42 per cent.

“We do believe that over time it’s going to get closer to 50 per cent, which we think is a healthy balance,” said chief operating officer Patrik Frisk, who has been tasked with a new strategy to help grow Under Armour’s business, since becoming president in 2017.

“North America will always be as a single region the largest region we have … in the foreseeable future. But we do now see an incredible demand for the brand around the world,” he added.

For its 2019 outlook, the company expects revenue growth in EMEA to be “up at a high single-digit percentage rate” and Asia Pacific to be up at a “high-teen rate,” according to the earnings call. Under Armour’s overall revenue is expected to increase approximately 3 to 4 per cent.

At the same time, Under Armour is planning to decrease its production in China from 18 per cent to 7 per cent in 2023. Mr Frisk said these plans were already in the works, regardless of the ongoing China-US trade war. For example, 25 per cent of production is in Latin America, he said.

“Since we’re a global brand, we now also have a totally global sourcing engine,” he said.

In the Middle East, there are a total of 19 stores — including 11 in the UAE, six in Saudi Arabia and two in Qatar amid plans to increase the number of outlets to 26 by the end of this year. Under Armour will be opening its first store in Kuwait next week. There will be five new stores in Saudi Arabia and potentially one more GCC location yet to be announced, according to Under Armour’s Middle East partner Athlocity.

“[The Middle East] feels like our backyard. We’ve been in the market for nearly five years now,” Mr Plank said.

Under Armour opened its first store in the region in Abu Dhabi’s Yas Mall in 2015. It has since added another store in Abu Dhabi and nine in Dubai, including a 700-square metre store at Dubai Mall that was inaugurated in September 2017 with Olympic legend brand sponsor Michael Phelps on hand.

The brand’s products are also distributed through a partnership with UAE retailers, such as Go Sport and Sun & Sand Sports. Elsewhere in the Middle East, Under Armour has partnered with retailers to sell its products in Jordan and Lebanon.

In terms of its retail expansion in the Asia Pacific region, Under Armour already has more than 660 locations through owned and partner stores with the majority in Mainland China, and is looking to increase that to more than 1,500 in the next five years.

In January, Under Armour announced a partnership with Virgin Galactic, part of Richard Branson’s Virgin Group, to design custom space suits and footwear for passengers and pilots.