Under Armour shares jump after it raises profit expectations amid sliding sales

By omshreeinfotech Feb 8, 2024
Under Armour shares jump after it raises profit expectations amid sliding sales

The inside of an Under Armour retailer is seen on November 03, 2021 in Houston, Texas.

Brandon Bell | Getty Images

Under Armour mentioned Thursday that its holiday-quarter sales slowed, however its earnings beat estimates because the athletic attire retailer labored to rein in prices.

Soft demand in North America and a slowdown in wholesale orders led income to drop 6% throughout the interval, however the firm posted huge features in its gross margin.

Under Armour now anticipates full-year sales will decline barely greater than it beforehand anticipated. Even so, it raised its expectations for full-year gross margin and earnings simply weeks away from the tip of its fiscal 12 months.

The firm’s shares have been up 3% in morning buying and selling. 

Here’s how Under Armour did in its third fiscal quarter in contrast with what Wall Street was anticipating, primarily based on a survey of analysts by LSEG, previously generally known as Refinitiv:

  • Earnings per share: 19 cents adjusted vs. 11 cents anticipated
  • Revenue: $1.49 billion vs. $1.50 billion anticipated

The firm’s reported internet revenue for the three-month interval that ended Dec. 31 was $114.1 million, or 26 cents per share, in contrast with $121.6 million, or 27 cents per share, a 12 months earlier. Excluding one-time objects associated to the sale of its MyFitnessPal platform, tax impacts and litigation reserves, Under Armour’s adjusted internet revenue was about $84 million, or 19 cents per share. 

For the complete fiscal 12 months, which is anticipated to conclude on the finish of March, Under Armour is projecting sales to fall by 3% to 4%, in contrast with its earlier expectation of down 2% to 4%. Wall Street had anticipated sales to drop 2.8%, based on LSEG. 

The retailer is anticipating to usher in earnings per share of 57 cents to 59 cents, up from a earlier vary of 47 cents to 51 cents. It anticipates it will publish adjusted earnings per share of fifty cents to 52 cents.

Wall Street had anticipated earnings of 49 cents per share, based on LSEG.

During the quarter, Under Armour noticed its gross margin jump by 1 proportion level to 45.2%, pushed by decrease freight bills and partially offset by elevated promotions and sales to off-price channels. For the complete 12 months, the corporate is now anticipating its gross margin to be up by 1.2 to 1.3 proportion factors, in contrast with a previous expectation of 1 to 1.25 proportion factors. 

“Despite a combined retail surroundings throughout the vacation season, our third quarter income outcomes have been consistent with our expectations; we have been in a position to ship higher than anticipated profitability and stay on observe to realize our full-year outlook,” Under Armour CEO Stephanie Linnartz mentioned in a press release. “As we shut out fiscal 2024 and our strengthened management staff begins to come back up to the mark within the quarters forward – we’re working to reset Under Armour towards a path of improved income progress and enhanced worth creation sooner or later.”

During the quarter, Under Armour’s wholesale income, which accounts for about 60% of sales, dropped 13% to $712 million. Partners like Dick’s Sporting Goods, Kohl’s and JD Sports pulled again on orders as they grapple with their very own demand and stock challenges. It’s a theme throughout the attire sector as wholesalers appeared to tighten their order books in an unsure economic system.

Like its friends, Under Armour has been working to broaden its sales on to customers by its shops and web site. During the quarter, Under Armour noticed these direct sales rise 4% to $741 million, pushed by a 5% uptick in retailer income and a 2% jump in digital sales.

Read the complete earnings launch here.

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