Under Armour Shares On A Decline

06:55 10/31/2017

Things are not looking up for Baltimore-based sports apparel company Under Armour, Inc. UA  that reported revenue of $1.41 billion, a decline of 5% compared to the same quarter last year. Analyst estimates for revenue came in at $1.48 billion which the company missed. Earnings per share came in at 22 cents beating analyst estimates of 19 cents.

Inventory increased 22 percent to $1.2 billion, Cash and cash equivalents increased 43 percent to $258 million.

Gross margin declined 160 basis points to 45.9 percent as benefits from changes in foreign currency rates and product costs were more than offset by pricing and other inventory management initiatives, and regional mix.

Operating income was $62 million. Adjusted operating income was $151 million.

On August 1, the company announced a restructuring plan, which detailed expectations to incur total estimated pre-tax restructuring and related charges of approximately $110 million to $130 million.

Operational challenges and lower demand in North America resulted in third quarter revenue that was below their expectations. Revenue in North America fell 12% to $1.07 billion, with wholesale revenue down 13% to $880 million. Direct to consumer revenue was up 15% to $468 million. This means consumers who like Under Armour are continuing to order product directly from the company. But they are not buying the brand in sporting goods stores; or when they do, it is at a discount.

Competitors like Adidas and NIKE, Inc. NKE  are performing well in the U.S. market with their stocks up 44% and 6% respectively so far in 2017. Under Armour shares are down 53% so far in 2017.

Under Armour has since slashed its full-year outlook for 2017.

The company’s international business however continues to thrive in line with their ambition of building a global brand.

This article has been provided by a Chasing Markets contributor. All content submitted by this author represent their personal opinions, and should be considered as such for entertainment purpose only. All opinions expressed are those of the writer, and may not necessarily represent fact, opinions, or bias of Chasing Markets.
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