What Happened To UA?

The past year

A lot of people have been criticized. The first is to promote their sports shoes.

Because clothing accounts for a large proportion of its sales, UA has to strengthen short boards to surpass competitors.

The NBA's new generation of star Curry, also signed by the company, has won the NBA championship and deserves it.

Sales of products are stimulating.

The second area that has been criticized is a more rapid global expansion.

Nike up, UA down

According to the world clothing and shoe net, UA was in the United States from 2010 to 2013.

The share of the market has increased from 2.6% to 4.9%, which has exceeded 3.8% of that year's Adidas.

In theory, the story of the US market can be replicated worldwide, and UA should also replace Adidas brand through global expansion.

But the result is quite different. In the past year, UA has become the biggest sporting goods company.

Shares fell more than 50%, while Nike, the industry leader, rose nearly 20%.

What happened to UA? Let's take a look at the latest quarterly data.

UA's overall wholesale revenue fell by 13%, while sportswear sales fell 8% compared to the same period last year, while sales of women and young users were lower than expected.

Gross margin dropped by 130 BP.

But inventories grew by 22% over the same period last year.

The total revenue in the 3 quarter was $1 billion 400 million, down 4% compared with the same period last year, while net profit was 100 million US dollars, a 22% drop compared to the same period last year.

Interestingly, the income of sports shoes and overseas business that had been criticized by UA has increased.

Sports shoes business grew by 2% compared with the same period last year, and international business revenue increased by 35%, of which Asia Pacific sales increased by 52%.

But none of these highlights can offset the biggest problem of UA in recent years: losing the US market.

From the chart below, we find that the sales growth rate of UA in the North American market has increased by more than 40% from the first quarter of 2015.

The rise of UA has a strong background of the times.

Over the past decade, the biggest feature of the sports industry is the enhancement of functionality and the weakening of brand names.

When Nike got up in 80s, there were so many scenes of basketball shoes.

Basketball, running and walking can be worn.

At that time, it was the sweetest time for big brand sports products, and the users' attention to functionality was not high.

So Nike is also the biggest sports brand in the us with Jordan's super IP.

Today, sports products are becoming more and more functional. There are professional shoes for running, fitness, retail and so on.

UA initially cut into a very subdivided sports tights market.

Their products are very focused, and then gradually grow from a niche market.

The smaller the market segment is, the stronger the first mover advantage will be for the market leader.

Many people today are users of UA superhero tights.

The following figure shows the annual compound growth rate of all sports brands from 2010 to 2015.

We see the top two are UA and LuluLemon.

They represent a leading market segment and have strong brand labels.

After having a longer period of sweetness, UA faced two fatal problems.

First, in the process of growing up, it is impossible to continue to maintain a small and beautiful business model, and sales revenue must continue to expand.

For retail products, sales expansion depends on two conditions: channel and consumption frequency.

The frequency of sports tights is difficult to increase, which only increases channels.

This also causes UA to turn from small brands to popular brands, leading to the gradual loss of UA's "forced case".

UA used to be the exclusive brand of sports fitness people, but today more and more ordinary people wear UA.

Just like one day, people on the streets are carrying LV, and those rich ladies will definitely choose new brands.

Second, the sports product industry also needs innovation in category.

Over the past few years, the layout and innovation of UA on sports shoes have not been successful, although growth has been slow.

On the contrary, Adidas and Nike have been catching up with sportswear.

In particular, Adidas, which was surpassed by UA in the past few years, has opened up new trees in recent years, and its sales revenue has gone back to UA.

Losing the North American market

For any innovator, you will have first mover advantage.

But this time cycle will be limited. If we can not continue to break through and innovate, it will easily be subverted.

We have analyzed the field of light luxury with you. In those days, the brand of innovative Michael Kors, Tory Burch and so on were also surpassed without continuous innovation.

Losing the North American market is fatal for UA.

That's why the growth of other data is increasing, but the growth rate in North America has dropped by 12%.

The core of global consumer goods is cultural output, such as Starbucks coffee, Disney Mickey Mouse, McDonald's hamburger, and even Nike sports shoes.

These brands can expand all over the world, and there must be "that's what Americans use."

The number of American users is leveraged.

An American user may bring several global users.

As the most powerful country in the world, the United States has been conveying culture to the whole world.

In essence, consumer behavior also seeks identity or labels through this culture.

Over the past few years, UA has seen a relatively big increase in the global market, because people in other parts of the world see President Obama, who is wearing this brand.

Therefore, the negative growth of the US domestic market in 2017 will also reflect the decline of its global sales next year.

UA, a former stock star, also saw a sharp drop this year.

In fact, UA has been the worst performing sports company in the past two years.

After the first mover advantage has not been grasped, signs of slowdown have begun to appear, and gradually develop into negative growth.

The compelling sport tights, once loved by many, have now returned to their auras.

This is the joy and pain that investment and research bring.

Discovering interesting business and business models is always a happy thing.

But in order to keep a company's life cycle in investment and to view the most authentic information in an objective world, many times it is not so happy.

And the market always teaches us that only by continuous study and continuous innovation can we not be eliminated.

More interesting reports, please pay attention to the world clothing shoes and hats net.