- Under Armor had $1.58 billion in revenue and an adjusted EPS of 16 cents, beating Wall Street’s expectations.
- The sportswear company is still struggling with excess inventory, which is up slightly quarter-on-quarter and up 50% year-over-year.
- The retailer known for its signature sweat-wicking shirt also raised its fiscal year earnings guidance.
under armor informed holiday quarter earnings This beat Wall Street’s expectations on Wednesday, but the retailer is grappling with a growing inventory glut that active promotions and discounts have failed to alleviate.
On Wednesday, the stock closed 8% lower at $9.88, leaving a market value of $4.47 billion.
Despite inventory issues, the sportswear company raised its profit forecast for the fiscal year. Earnings per share are now expected to be between 52 cents and 56 cents, compared to the previously expected range of 44 cents to 48 cents.
Here are Under Armor’s fiscal third quarter results compared to what Wall Street expected, according to an analyst poll conducted by Refinitiv:
- Earnings per share: 16 cents adjusted against expected 9 cents
- Income: $1.58 billion against the expected $1.55 billion.
The company’s net income for the three-month period ended December 31 was $121.62 million, compared to $109.66 million a year earlier. Sales rose to $1.58 billion from $1.53 billion a year earlier.
Like other retailers, the sportswear company is battling stock glut caused by supply chain issues and changing consumer demand trends. During the third fiscal quarter, Under Armor’s inventory rose 50% year-over-year. Despite strong promotions and discounts during the critical holiday quarter, inventory was up slightly from the previous quarter.
The company said it expects inventory levels to remain elevated through the end of the fiscal year before peaking at the end.
However, acting CEO Colin Brown insisted the company was “reasonably happy” with its warehouse position. He blamed the surge on “incredibly low” inventory levels in 2021, which he said were lower due to supply chain and overall strategy disruptions.
“This 50 percent increase is a big number, but if you actually look at the amount of inventory we currently have, we are holding the right inventory level for a $6 billion business,” Brown told investors during an earnings call. and losses. “Our inventories are in line with how we expect our business to develop next year.”
Promotions and discounts continued to cut Under Armor’s profits, which were down 6.5% year-over-year. The company avoided a sharper drop in margins by managing its costs better. Selling, general and administrative expenses fell 11% to $604 million, which also helped the company beat earnings estimates despite subdued holiday sales.
The company now expects SG&A spending to fall by a low single-digit interest rate from its previous expectation of a “slight decline”. He also expects gross margin to fall to the upper end of the previously provided range of 3.75% to 4.25%.
The company recorded a 7% jump in wholesale revenue and a decline in direct-to-consumer sales.
While sales in Asia fell by 9%, Under Armor has made great strides internationally. Revenue increased 45% in Latin America and 32% in Europe, the Middle East and Africa.
A 2% drop in apparel, which accounts for the bulk of Under Armor’s sales, was offset by a 25% jump in footwear revenue.
In December, the company announced that former Marriott chief executive Stephanie Linnartz would become CEO and begin work on February 27. .
Under Armor is working to expand its e-commerce operations and is building on the expertise of Linnartz, who led Marriott’s multi-billion dollar digital transformation to accelerate the company’s digital initiatives.
E-commerce sales grew 7% in the latest quarter and accounted for 45% of Under Armor’s total DTC revenue.
Read full income statement here.
Correction: This story has been updated to reflect the correct quarterly eCommerce results.
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