Under the armor On Thursday, the company said its quarterly sales fell 14% in North America and adjusted its full-year profit forecast after settling a years-old securities lawsuit for $434 million.
Still, the company beat Wall Street expectations on both revenue and profit.
Here's how the sportswear company fared in its fiscal first quarter compared with what Wall Street expected, according to a survey of analysts by LSEG:
- Earnings per share: 1 cent adjusted compared to an expected loss of 8 cents
- Revenue: $1.18 billion versus the expected $1.15 billion
In the three months ended June 30, Under Armour reported a loss of $305.4 million, or 70 cents a share, compared with a profit of $10 million, or 2 cents a share, a year earlier. Excluding one-time items, it reported a profit of $4 million, or 1 cent a share.
Sales fell to $1.18 billion, down 10% from $1.32 billion a year earlier.
In late June, Under Armour agreed to settle a years-long securities lawsuit for $434 million about three weeks before the trial was set to begin. In 2017, Under Armour was accused of misleading shareholders about its revenue growth in an attempt to meet Wall Street forecasts.
In a press release, the company said it was not admitting wrongdoing or fault, but had agreed to end the case (about seven years after it was filed) due to “the costs and risks inherent in litigation.” Under Armour said it would pay the settlement with cash from its revolving credit facility.
The company now expects to post a loss in fiscal 2025. It forecasts losses per share of 53 cents to 56 cents and adjusted earnings per share of 19 cents to 22 cents.
Under Armour previously expected full-year earnings of 2 cents to 5 cents per share and adjusted earnings of 18 cents to 21 cents per share.
The sportswear company is in the midst of a broad restructuring plan as it struggles to regain relevance, reverse a sales slump and boost profits. Earlier this year, Under Armour said it would lay off an undisclosed number of workers, reduce promotions and discounts and streamline its assortment to become more competitive. It is also looking to copy the example of From Nike playbook and position Under Armour as a premium brand.
The restructuring took place two months after the ex Marriott Under Armour CEO Stephanie Linnartz has been ousted, with founder Kevin Plank returning to the helm once again.
In a statement Thursday, Plank said the company is “encouraged by early progress” in its efforts. However, Under Armour's sales fell during the quarter.
In North America, Under Armour’s biggest market, sales fell 14% to $709 million, but were above the $669.1 million expected by analysts, according to StreetAccount. Wholesale revenue fell 8% to $681 million, while direct-to-consumer sales declined 12% to $480 million.
Sales at Under Armour-owned and operated stores fell 3%, while online sales plummeted a staggering 25%, a drop the company attributed to “planned decreases in promotional activities.”
Apparel revenue fell 8%, footwear sales fell 15% and accessories revenue decreased 5%.
In its quest to regain growth and position itself as a premium retailer in a crowded sportswear space, Under Armour is adding new talent and expanding into sustainable fashion.
On Tuesday, the retailer announced that it had acquired sustainable fashion brand Unless Collective and will bring on board the brand's founder, former Adidas-Executive Eric Liedtke, as executive vice president of brand strategy.
“Eric will be globally responsible for amplifying Under Armour's brand identity and storytelling, its end-to-end strategic planning process and executing transformation initiatives that accelerate UA's growth while continuing to lead and curate UNLESS,” a press release about the acquisition said.
“He will report directly to President and CEO Kevin Plank and oversee UA's brand presence across category marketing, consumer intelligence, creative, marketing operations, loyalty, social media, sports marketing and all strategy functions,” the statement said.
Unless bills itself as “the world’s first regenerative fashion brand made from 100% plants and zero plastic” and says it was created to prove that plants can replace plastics in clothing and footwear manufacturing.
Read the full earnings release here.
