Under Armour is an athletic wear company founded in 1996, with current revenues hovering around $5.2 billion. The company has subsidiaries all over the world, as well as several fitness-related tech holdings.
In a press release, the global fitness giant announced last month that it is selling off its personal fitness app MyFitnessPal for $345 million, a loss of $130 million from their acquisition of the app in 2015. MyFitnessPal has been on the scene since 2015 and has garnered over 200 million users. Its main feature is its extensive international database of foods, used for its calorie counter and diet plan tools.
The sale of MyFitnessPal is coupled with the wind-down of Endomondo, a similar platform which it acquired at the same time. The planned sale was to simplify and focus its digital strategy. With the sale, Under Armour plans to commit more focus to its dedicated pro and semi-pro users, which lend themselves more effectively to the growth of Under Armour’s core business.
Although Under Armour is selling two of its significant acquisitions, they are not bidding farewell to all their digital platforms. Under Armour also announced that they would continue to operate the offshoots of MapMyFitness, MapMyRun, and MapMyRide, along with the Under Armour line of connected footwear.
The President and CEO of Under Armour Patrik Frisk said, "As part of our ongoing transformation, we are committed to actively managing our business to ensure that our strategies and assets are prioritized to connect even more deeply with our target consumer – the Focused Performer."
The sale also frees up capital for further investments toward a seamless, more practical Under Armour infrastructure. Although one would expect a self-guided fitness subsidiary to witness significant growth opportunity in light of the recent pandemic and restrictions on shared workout spots, like gyms, the company for the second quarter of 2020 reported a $183 million loss as sales for the period dropped 41% to $707.6 million.
A likely explanation for this drop is the comparative power of newer entrants to this market. Apple, for example, has launched a vigorous endeavor to secure entry-level fitness users via Apple Watch hardware and Apple Health software offerings, as well as its anticipated Apple Fitness+ service, which it plans to launch later this year. These apps provide a reasonably comprehensive alternative to Under Armour’s apps that users can enjoy at no or very little cost, with hardware they own already.
Regardless of the reasons for the sale, Under Armour’s strategy will be an interesting examination in business adaptation. Only the fastest companies can survive in a competitive and changing market, and it may be time for Under Armour to prove that it is one of them.
