The Armoury What's new with Baltimore sports apparel maker Under Armour

Analyst encouraged by changes at Under Armour

Under Armour has been taking steps to turn around a struggling brand, and one analyst said Monday he is encouraged by what he’s hearing from management.

“Recent discussions with Under Armour leave us highly encouraged by leadership commitments to profitability improvement,” Jim Duffy, an analyst covering sports and lifestyle brands for Stifel, said in a report.

Duffy also has a more optimistic view of earnings power and potential for the stock, he said. Stifel, which has a buy on Under Armour’s stock, raised its price target to $27 per share.

After years of rapid growth, the brand stumbled badly in 2017, as sales growth slowed — especially in the U.S. — amid store closings by key retailers, intense competition and changing demand for athletic apparel.

Management has promised to shift from rapid growth mode and focus on becoming more efficient, cutting back on sponsorship commitments, reducing the variety of products sold, shortening the lead time between product development and sale, and making better decisions about where products are sold.

Duffy said the restructuring might not be showing up in the company’s financial performance yet, but high inventory levels should be more under control by the end of the year.

“Evidence is building that leadership is walking the walk,” he said.

Sifel’s report followed one last month by Jefferies equity analyst Randal J. Konik, who noted recent improvements in Under Armour’s product design and ability to drive demand. A lot of that, Konik said in that report, has to do with the popularity of NBA superstar Stephen Curry’s latest signature basketball shoe for the brand.

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