The interior of an Under Armor store is seen on November 3, 2021 in Houston, Texas.
Brandon Bell | fake images
under the armor said Thursday that its Christmas quarter sales slowed, but its profits beat estimates as the sportswear retailer worked to control costs.
Weak demand in North America and a slowdown in wholesale orders caused revenue to fall 6% during the period, but the company posted big gains in its gross margin.
Under Armor now anticipates full-year sales will decline a bit more than previously expected. Still, it raised its expectations for full-year gross margin and profit just weeks before the end of its fiscal year.
The company's shares rose 3% in morning trading.
Here's how Under Armor fared in its fiscal third quarter compared to what Wall Street anticipated, according to a survey of analysts by LSEG, formerly known as Refinitiv:
- Earnings per share: 19 cents adjusted vs. 11 cents expected
- Revenue: $1.49 billion vs. $1.5 billion expected
The company's reported net income for the three months ended Dec. 31 was $114.1 million, or 26 cents per share, compared with $121.6 million, or 27 cents per share, a year before. Excluding one-time items related to the sale of its MyFitnessPal platform, tax impacts and litigation reserves, Under Armour's adjusted net income was approximately $84 million, or 19 cents per share.
For the full fiscal year, which is expected to conclude at the end of March, Under Armor projects sales will fall between 3% and 4%, compared to its previous expectation of a 2% to 4% drop. Wall Street expected sales to fall 2.8%, according to LSEG.
The retailer expects earnings per share of 57 cents to 59 cents, down from the previous range of 47 cents to 51 cents. He anticipates that he will post adjusted earnings per share of 50 cents to 52 cents.
Wall Street was expecting earnings of 49 cents per share, according to LSEG.
During the quarter, Under Armor saw its gross margin increase by 1 percentage point to 45.2%, driven by lower freight expenses and partially offset by increased promotions and sales to discount channels. For the full year, the company now expects its gross margin to increase between 1.2 and 1.3 percentage points, compared to a previous expectation of between 1 and 1.25 percentage points.
“Despite a mixed retail environment during the holiday season, our third quarter revenue results were in line with our expectations; we were able to deliver better-than-expected profitability and remain on track to achieve our full-year outlook,” Stephanie Linnartz, CEO of Under Armour. he said in a statement. “As we close out fiscal 2024 and our strengthened leadership team begins to catch up in the coming quarters, we are working to restore Under Armor to a path of better revenue growth and greater value creation going forward.” .
During the quarter, Under Armour's wholesale revenue, which accounts for about 60% of sales, fell 13% to $712 million. Partners like it Dick's Sporting Goods, Kohl's and JD Sports They pulled orders while dealing with their own demand and inventory challenges. It's an issue across the apparel sector, as wholesalers looked to adjust their order books in an uncertain economy.
Like its peers, Under Armor has been working to expand its sales directly to consumers through its stores and website. During the quarter, Under Armor saw those direct sales increase 4% to $741 million, driven by a 5% increase in store revenue and a 2% increase in digital sales.
Read the full earnings release here.
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