According to the Securities Times app, on November 8, Under Armour (UA.US) held the FY25Q2 earnings conference. Under Armour stated that there are no structural obstacles in terms of gross margin, and it is expected to reach 50% in the long term. It is expected that future promotional activities will decrease, the DTC ratio will increase, the average selling price and segmented markets will also improve. In the long run, footwear growth will surpass outfits growth. Additionally, the company plans to launch updated SlipSpeed products in the first quarter of 2025, and more products in the fall/winter of 2025.

Furthermore, the company is working hard to improve product quality, shifting from price competition to product-centric scientific and design competition, and acknowledges that it will take time to make adjustments. There is also a focus on the huge market opportunity in sportswear. In terms of marketing, the company plans to invest in brand building in Europe and the Asia-Pacific region, allocate some funds in the US market for top-level brand promotion, and plan promotional activities during important events such as the 2025 NBA All-Star Game and March Madness basketball tournament.

Q&A

Q: How has Eric performed since joining the team?

A: Eric is an experienced global executive, and his addition has been a great complement to the team. He has helped us make important adjustments in brand strategy, operation mode, and marketing. We plan to launch a major marketing campaign in 2025 to better utilize our budget.

Q: What is your company's outlook on future gross margin?

Regarding the gross margin, we do not have structural barriers, and in the long term, we are expected to reach 50%. We anticipate a reduction in future promotional activities, an increase in DTC ratio, an improvement in average selling price and segmentation markets. Long-term growth in footwear will surpass growth in outfits.

The company mentioned that the new products received strong feedback. Could you please provide more details about these new products and the response from retailers?

Our product pipeline is very healthy with many exciting products set to launch. We plan to introduce updated SlipSpeed products in the first quarter of 2025 and more products in the fall-winter season of 2025. We are working to ensure a blend of product and storytelling, to better narrate our product stories in e-commerce.

Outlook for the North American market?

We still have a lot of work to do in the North American market, but we believe consumers strongly identify with our brand. We have made positive adjustments in our e-commerce business, which have impacted the gross margin. We are striving to enhance product quality, shifting from price competition to product-centric scientific and design competition, which will take some time. Additionally, there are significant opportunities in sportswear. The company is rationalizing SKUs, planning to reduce 25% of SKUs in the next 12-18 months, making it easier for consumers to choose and aiding in cost management. The company is satisfied with the progress of the current business adjustments and sees great growth potential for the future in the North American business.

What aspects will the increased marketing expenses in the second half of the year be used for?

In H2 compared to H1, approximately $40 million will be invested in marketing. We plan to conduct brand building in different regions, especially in Europe and the Asia-Pacific region. We will allocate a portion of funds to the United States market for top-level brand promotions. We also plan to promote in key events such as the 2025 NBA All-Star Game and March Madness basketball tournament.

How are the inventory and promotional levels in various regions?

A: This year, the industry's inventory performance has improved year-on-year. The industry's competitive environment is fierce, dealers are cautious, and not aggressively seeking significant increases in orders. We believe that the current level of company inventory is appropriate and expect it to decrease by the end of the year. Most of the inventory consists of seasonal products with active demand. The company will continue to optimize inventory management in the future.

Q: How is the progress of the dialogue with wholesale partners?

A: In the dialogue with wholesale partners, they have a positive attitude towards us and expect us to provide products that can break through the market. We are working to ensure the combination of products and stories so that we can better tell our brand story. Currently, we have less shelf space in dealers than before. The company has been in discussions with dealers from various regions this year, showing them the changes in the brand, and working hard to collaborate and secure more shelf space.