Under Armour to Buy Two Fitness Apps as It Builds Online Community

BALTIMORE (The Baltimore Sun/TNS) -

Under Armour Inc. is acquiring two fitness-app companies for $560 million, as the Baltimore-based sports-apparel brand continues to build its technology business and create what it calls the largest online fitness community.

After making significant moves in the connected fitness arena last year, Under Armour announced the two new deals Wednesday as it released fourth-quarter results showing soaring sales and profits.

The fast-growing fitness company said it is buying San Francisco-based MyFitnessPal for $475 million and that it already acquired Endomondo, based in Copenhagen, Denmark, for $85 million last month.

Coupled with the fitness community it purchased last year with its MapMyFitness acquisition, Under Armour now says it will create the world’s largest online fitness community with more than 120 million global users.

Endomondo has about 20 million registered users, mostly in Europe, while MyFitnessPal has more than 80 million users and resources such as a calorie counter and nutrition and exercise tracker. That deal will close in the first quarter.

Last month, at the Consumer Electronics Show in Las Vegas, Under Armour released its own fitness app called UA Record, which is designed to aggregates users’ data from a variety of fitness-tracking devices and create an online community in which users can follow, encourage and challenge each other.

Under Armour first got into fitness tracking with its Armour39 biometric device in 2011, then acquired MapMyFitness in December 2013, which includes websites that now have 31 million registered users.

“Today, we have taken defining steps by announcing the acquisitions of two powerful digital businesses that help create the world’s largest digital health and fitness community,” said Kevin Plank, Under Armour’s founder and CEO, in the announcement. “We are developing a digital ecosystem that provides us with unparalleled data and insight into making every athlete better.

“We are now extremely well-positioned to create an unrivaled experience for our consumer and a multitude of new opportunities to drive our core business.”

The announcement of the acquisitions came as Under Armour released its results for the fourth quarter. Its profit soared 37 percent to $88 million in the quarter ended Dec. 31, up from $64 million a year earlier. Earnings per share hit 40 cents, up from 30 cents.

Sales jumped to $895 million in the October-to-December period, up 31 percent from $683 million in 2013’s fourth quarter.

Under Armour saw sales growth across its categories, with apparel revenue up 30 percent to $708 million, driven by new offerings in the training, hunting and studio lines, and footwear sales up 55 percent to $86 million, led by new running and basketball shoes.

It was the company’s 19th consecutive quarter of sales growth of 20 percent or more, “demonstrating the unending opportunity we see across our five key growth drivers,” Plank said.

The results also topped the estimates of Wall Street analysts, who had projected Under Armour would earn 39 cents per share on $849 million in sales during the fourth quarter.

Before the announcement, shares of Under Armour rose 1 percent Wednesday to close at $73.57 on the New York Stock Exchange. In aftermarket trading, the shares lost $1.12, or 1.5 percent, to $72.45.

In a report Tuesday, Canaccord Genuity analyst Camilo Lyon reiterated a buy rating for Under Armour’s stock amid expectations of a “solid” fourth quarter. He said strong sales of full-price merchandise during the holidays boosted the end-of-year performance and should lead to a strong start to the year.

Under Armour “is on its way to becoming the No. 2 global athletic brand with an opportunity to reach $10 (billion) in sales by 2019, driven by international expansion … and footwear,” as well as by sales through the company’s own stores and ecommerce sites, Lyon said.

Though sluggish growth is expected this year in the apparel sector, Under Armour finds itself uniquely positioned, with room to grow, UBS analyst Michael Binetti said in a report previewing the quarter.

The company expects its global sales, now 10 percent of the business, to account for half its sales in the long term. Women’s business, now at $500 million and less than half the size of men’s, is projected to grow as big if not bigger than men’s in the long term, while footwear, which accounts for 15 percent of sales, could equal or outpace apparel sales.