Under Armour CEO Kevin Plank often notes that the company's core business is selling athletic apparel and shoes, but the company's connected fitness unit has grown up to be a real part of the enterprise.
For 2018, Under Armour's connected fitness division reported an operating profit of $4 million on revenue of $120.36 million, up 18.1 percent from a year ago. The division, comprised of apps such as MapMyRun and MyFitnessPal, reported a fourth quarter operating loss of $2.6 million on revenue of $30.3 million.
Under Armour reported 2018 sales of $5.2 billion, up 4 percent a year ago, with a net loss of $46 million.
The turnaround in Under Armour's digital division is impressive. For 2017, Under Armour connected fitness had an operating loss of $55.27 million.
Under Armour has scaled back its connected fitness chatter considering the splash it originally made when it acquired its way into the business. Slowing sales, bloated inventory and operational issues put connected fitness on the back burner a bit.
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Speaking on the company's fourth quarter earnings conference call, Plank outlined how connected fitness is a real part of the business now, becoming an analytics engine to gauge consumer trends and a nice recurring revenue stream. Plank said that connected fitness has gone "from being a place or a thing that's in the organization to really being a part of the business."
Going back to the first acquisition we had, the goal that we've always had with this was to improve the experience for our consumer, meaning -- and ultimately to help us sell more shirts and shoes. That is our core business and what we do. But we think with the world's largest digital health and fitness communities obviously puts us in a terrific position to truly understand and get deep with knowing who our consumer is.
Subscriptions have been the growth driver for the connected fitness business, but Plank noted that Under Armour's HOVR running shoe will bridge digital with running.
When we say the purpose of this business is to help us sell shirts and shoes, we're going to have a lot of HOVR in the marketplace, millions of pairs of HOVR in the marketplace. That'll be a connected experience. It will actually be providing Gait Coaching and machine learning algorithms to really improve and help the consumer get better, which is our mission overall. So I think what you're finding and what you're seeing is we're still figuring out how to unlock the true power of what this size and scale of this network means for us. But it's going to be incredibly important for our future, so I think we're looking forward to what this will bring.
Here's a quick Under Armour connected fitness history lesson:
- Under Armour buys MapMyFitness in $150 million wearable computing play
- Will Under Armour's big data, app experiment pay off?
- Under Armour at CES highlights digital transformation efforts as clothing, wearables, apps, data merge
- Under Armour says digital revenue in Q1 nearly tops 2015 tally
- UA HealthBox: Connected fitness in a box from Under Armour and HTC
- Under Armour cites change management woes with SAP implementation as digital transformation stumbles
- Under Armour says 150 million MyFitnessPal accounts hit by data breach