Under Armor The sportswear retailer said Thursday that sales at its business were declining, but the sportswear retailer reported better-than-expected fiscal first-quarter results, sending its shares soaring in early trading.
The company’s revenue and profit beat Wall Street expectations. Its shares opened up about 17%.
Here’s how the sportswear company’s fiscal first-quarter performance compared with Wall Street expectations, according to a survey of analysts by LSEG:
- Earnings per share: Adjust 1 cent Expected loss of 8 cents
- income: $1.18 billion vs. $1.15 billion expected
Under Armor lost $305.4 million, or 70 cents a share, in the three months ended June 30, compared with a profit of $10 million, or 2 cents a share, a year earlier. Excluding one-time charges, the company reported profit of $4 million, or 1 cent per share.
Sales fell to $1.18 billion, down about 10% from $1.32 billion a year earlier.
In late June, Under Armor agreed to settle a year-old securities lawsuit for $434 million, about three weeks before the trial began. In 2017, Under Armor was accused of deceive shareholders Its revenue grew to meet Wall Street forecasts.
The company said in a news release that it did not admit negligence or wrongdoing but agreed to end the case about seven years after it was filed because of the “costs and risks inherent in litigation.” Under Armor said it will pay the settlement using the following methods: Cash from its revolving credit facility.
The company now expects to post a loss in fiscal 2025.
Under Armor previously forecast full-year earnings per share of 2 cents to 5 cents, and adjusted earnings of 18 cents to 21 cents per share.
The sportswear company is in the midst of a extensive restructuring plan The company is trying to regain clout, reverse declining sales and boost profits. Earlier this year, Under Armor said it would lay off an unspecified number of employees, cut promotions and discounts, and streamline its product offerings to become more competitive. It also wants to stand out from the Nike’s script and position Under Armor as a premium brand.
The restructuring comes two months after the previous Marriott CEO Stephanie Linnartz Under Armor CEO fired and founder Kevin Plank back at the helm again.
Plank said in a statement on Thursday that the company was “encouraged by the early progress” of its efforts. Although sales in the Under Armor business continued to decline this quarter, performance was still better than expected.
In North America, Under Armor’s largest market, sales fell 14% to $709 million, according to StreetAccount, but were higher than analysts’ expectations of $669.1 million. Wholesale revenue fell 8% to $681 million, while direct-to-consumer sales fell 12% to $480 million.
Sales at Under Armor owned and operated stores fell 3%, while online sales plunged 25%, a decline the company attributed to “planned reductions in promotions.”
Apparel revenue fell 8%, footwear sales fell 15% and accessories revenue fell 5%.
While Under Armor’s customers are adapting to fewer promotions, a slowdown in discounting boosted profit margins in the quarter. The company’s gross profit margin rose 1.1 percentage points to 47.5%, better than analysts’ expectations of 46.1%, according to StreetAccount.
Under Armor is recruiting new talent and expanding into sustainable fashion as it looks to return to growth and position itself as a premium retailer in the crowded sportswear space.
On Tuesday, the retailer announced it has acquired sustainable fashion brand Unless Collective and will hire the brand’s founder, the former Adidas Chief executive Eric Liedtke serves as executive vice president of brand strategy.
A press release about the acquisition stated: “Eric will…be responsible for expanding Under Armor’s brand identity and storytelling globally, a comprehensive strategic planning process, and executing transformational initiatives to accelerate UA’s growth, while continuing to lead and orchestrate unless , unless so.
“He will report to President and CEO Kevin Plank and oversee UA’s strategic functions through category marketing, consumer intelligence, creative, marketing operations, loyalty, social media, sports marketing and all strategic functions,” the release states. Brand.
Unless calls itself “the world’s first all-plant, plastic-free recycled fashion brand” and says it was created to prove that plants can replace plastic in clothing and footwear manufacturing.
William Blair analysts warned in a research note Thursday that while Under Armor’s first-quarter results were “better than expected,” the brand will need time to return to growth.
“While the goal of resetting the brand to a more premium positioning while narrowing the focus to core fundamentals may prove to be a meaningful catalyst in the long term, the reality is that with the massive consumer impact , which takes time to achieve.
“Risks include Under Armor’s ability to maintain and grow a strong brand image and product portfolio in a highly competitive industry, historically high senior management turnover, and CEO Kevin Plank’s majority control Voting control.
Read the full earnings report here.
