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Under Armour sales fall after retailer cuts discounts, promotions in bid to be more premium
UAUnder Armour(UA) CNBC·2024-08-08 11:53

Core Viewpoint - Under Armour reported a significant decline in quarterly sales and adjusted its full-year profit guidance after settling a long-standing securities lawsuit for 434million,althoughitexceededWallStreetexpectationsforearningsandrevenue[1][2].FinancialPerformance−Quarterlysalesfellto434 million, although it exceeded Wall Street expectations for earnings and revenue [1][2]. Financial Performance - Quarterly sales fell to 1.18 billion, down approximately 10% from 1.32billionayearearlier[2].−Thecompanyreportedalossof1.32 billion a year earlier [2]. - The company reported a loss of 305.4 million, or 70 cents per share, compared to a profit of 10million,or2centspershare,ayearearlier[1].−Adjustedearningspersharewere1cent,beatingtheexpectedlossof8cents,whilerevenuesurpassedexpectationsof10 million, or 2 cents per share, a year earlier [1]. - Adjusted earnings per share were 1 cent, beating the expected loss of 8 cents, while revenue surpassed expectations of 1.15 billion [1]. Lawsuit Settlement - Under Armour settled a securities lawsuit for 434million,whichaccusedthecompanyofdefraudingshareholdersregardingrevenuegrowth[2].−Thesettlementwillbepaidusingcashfromitsrevolvingcreditfacility,andthecompanydidnotadmitfaultorwrongdoing[2].FutureGuidance−Thecompanynowexpectstoincurlossesinfiscal2025,forecastinglossespersharebetween53centsand56cents,andadjustedearningspersharebetween19centsand22cents[2][3].−Previously,UnderArmouranticipatedfull−yearearningsof2centsto5centspershareandadjustedearningsbetween18centsand21centspershare[3].RestructuringEfforts−UnderArmourisundergoingabroadrestructuringplantoregainmarketrelevance,reversesalesdecline,andboostprofits,includinglayoffsandreducedpromotions[3].−Thecompanyaimstopositionitselfasapremiumbrand,takinginspirationfromNike′sstrategy[3].SalesBreakdown−InNorthAmerica,salesdropped14434 million, which accused the company of defrauding shareholders regarding revenue growth [2]. - The settlement will be paid using cash from its revolving credit facility, and the company did not admit fault or wrongdoing [2]. Future Guidance - The company now expects to incur losses in fiscal 2025, forecasting losses per share between 53 cents and 56 cents, and adjusted earnings per share between 19 cents and 22 cents [2][3]. - Previously, Under Armour anticipated full-year earnings of 2 cents to 5 cents per share and adjusted earnings between 18 cents and 21 cents per share [3]. Restructuring Efforts - Under Armour is undergoing a broad restructuring plan to regain market relevance, reverse sales decline, and boost profits, including layoffs and reduced promotions [3]. - The company aims to position itself as a premium brand, taking inspiration from Nike's strategy [3]. Sales Breakdown - In North America, sales dropped 14% to 709 million, better than the expected 669.1million[4].−Wholesalerevenuedecreasedby8669.1 million [4]. - Wholesale revenue decreased by 8% to 681 million, while direct-to-consumer sales fell 12% to $480 million [4]. - Online sales plummeted 25%, attributed to planned decreases in promotional activities [4]. Product Revenue Trends - Apparel revenue fell 8%, footwear sales dropped 15%, and accessories revenue slid 5% [4]. Strategic Acquisitions - Under Armour announced the acquisition of sustainable fashion brand Unless Collective, aiming to enhance its brand strategy and expand into sustainable fashion [4][5]. - Eric Liedtke, the founder of Unless Collective, will join Under Armour as executive vice president of brand strategy [5].