Calculating calories in a "medium" avocado... Acquisitions get a lot of buzz, but today we've got an un-acquisition on our hands. Under Armour bought MyFitnessPal back in 2015 for a caloric $475M. Now it's trying to sell the diet tracking app, according to The Information. Let's rewind to a time when UA was trying to expand beyond apparel:
- 2013-2015: UA snatches up health trackers MapMyRide for $150M, MyFitnessPal for $475M, and Endomondo for $85M. All so you can log that 153-calorie bag of Cheetos (+ an almond) and burn it off in a cal-tracking workout.
- 2019: These apps made up less than 3% of UA’s sales. Besides monetizing with subscriptions and ads, UA didn't use them to create a holistic fitness brand. It didn't merge them into a UA app, or leverage them to drive apparel sales through recommendations.
Protect This Clearing House... As consumer tastes shifted, Under Armour focused too much on the "ath," not enough on the "leisure." Its 2019 sales grew just 1.4% (compared to Lululemon's 24% growth). Now the corona-conomy is messing with its financial struggles:
- UA expects sales could fall 50%-60% this quarter — it took a $590M loss last quarter on corona-closed stores.
- It's planning to cut $325M in costs for 2020, and just canceled its $280M UCLA apparel deal. The MyFitnessPal sale could be another sacrifice in this cost-slashing plan.
Big acquisitions have big opportunity costs... UA spent $710M on three fitness apps that seemingly haven't done much to help its brand. What could Under Armour have spent that money on instead — aka what was the opportunity cost? UA could have acquired or built its own athleisure line to slow Lululemon's threat. It even could have tried to buy a company like Peloton which was worth way less than $710M when Under Armour splurged $710M on these apps.