Three years ago, athletic apparel specialist Under Armour (NYSE:UA) (NYSE:UAA) was riding high, a popular upstart brand taking market share from established leaders like Nike. Then, the company's rise got derailed as a combination of changing tastes, weakening customer traffic to its brick-and-mortar retail partners, and other issues crimped its profits. The stock, at its 2017 nadir, had lost three-quarters of its peak value. But that was then. This week, the company reported on its third quarter, and its profits beat expectations as international sales rose 15%.

In this segment from MarketFoolery, host Chris Hill and senior analyst Taylor Muckerman talk about the progress of Under Armour's restructuring, the conditions at retail partners like Dicks Sporting Goods and Kohl's, the longer-term outlook, and more.

A full transcript follows the video.

This video was recorded on Oct. 30, 2018.

Chris Hill: We have to start with the stock of the day, and that is, I am very happy to say, for the first time in a long time, Under Armour. Third quarter profits for Under Armour came in higher than expected. International sales really look like they crushed it, and the stock up 23% this morning.

Taylor Muckerman: This appears to be the quarter that the market's been waiting and waiting and waiting for out of Under Armour. Sales, as you mentioned, in the U.S., lackluster, down 2%. International up 15%. That's carrying the day here. Definitely coming out of kind of a restructuring turnaround. They fired several hundred people lately, and the potential to maybe have another round of that moving forward. They seem to be on track.

One thing that jumped out to me, kind of ironic, they mentioned that sales to Dick's were up 4%. Just in August, Dick's blamed their lackluster performance on decreasing Under Armour sales in their stores. So, kind of two different tales there. Under Armour says it's going well inside of Dick's. Dicks says their partnership with Kohl's is hurting business in the fully priced stores like Hibbett Sports and Dick's with the discount Kohl's partnership.

I like what I see here. I also dig what they're trying with ArmourBox, which they announced last week, after the quarter. It didn't impact the quarter. It's kind of the Stitch Fix model of subscription box for athletic apparel. I don't know if it's going to be a real needle-mover, but it could enhance the brand. At least they're trying something that consumers these days appear to be pretty in tune with.

Hill: A couple of other things. If you look at how they're managing their inventory, they appear to be doing a better job of that. Something that you and I have talked about, and Jason Moser has made this point, Matt Argersinger has made this point. Going back to the beginning of the year, Kevin Plank, very much the leader of Under Armour, but the executive team around him, you and Matt and Jason pointing out, "Look, he has to figure out a way to work with his management and keep them in place because the turnover in the C-Suite has been higher than what you like to see." I don't want to jinx anything, but they're still there.

Muckerman: They are still there. Hopefully we can continue to see that. With successes like this, maybe they found that group that finally is going to be able to turn this company around and challenge the likes of Nike like they always thought they could. But, even with the stock up 23% today, it still has to more than double from here to get back to its all-time highs, which was very early on in the days of this company as a public company. It still has a lot of work to do, if you've been a long-term investor, to get back to even. But you like to see something like this, at the very least.

Hill: Yeah. It's around $22 a share when we came into the studio. You go back two or three years, it doubled that, basically. So, this is great for me and anyone else who is a shareholder of Under Armour, but for the amount of time that I've held it, still very much underwater.

Muckerman: Agreed. I'm in the same boat. We're slowly starting to rise against the tide here, though.

Hill: Right. Again, this is great, let's see this next quarter and the quarter after that. The international sales is great to see, but it's only going to carry it so far. They can't keep treading water in the United States.

Muckerman: No, they can't. Maybe these self-branded stores really help out because you have higher margins there. That was about 33% of sales this quarter. If that can gain a little bit more traction, I think that could help. And, maybe, if they can boost branded store sales internationally. Obviously, international, if they can expand, is much bigger than the United States. But certainly, their home market is the biggest breadwinner for them at the moment.

Chris Hill owns shares of Under Armour (A Shares) and Under Armour (C Shares). Taylor Muckerman owns shares of Under Armour (C Shares). The Motley Fool owns shares of and recommends SFIX, Under Armour (A Shares), and Under Armour (C Shares). The Motley Fool recommends NKE. The Motley Fool has a disclosure policy.