CEO Patrik Frisk pointed to the increased demand for the sportswear maker’s products, particularly in North America, for the better than expected performance.
The company has worked to regrowth on home turf and competes with greats like Nike, Adidas and Lululemon. In the past, the company relied heavily on department stores and discount chains to sell its equipment. This strategy has hurt profitability and has watered down the brand’s image compared to other companies. But the impact of the pandemic – more consumers are shopping online and looking for clothes and shoes to work out with – are giving Under Armor a welcome boost.
The question, however, is how long it will take.
Under Armor offered Wall Street a more optimistic outlook for 2020: it now expects full year sales to decrease by a large percentage of teenagers. It had previously called for a 20% to 25% decline in the second half of the year. The new outlook is still down, but better than the 25.7% decline forecast by analysts.
Under Armor announced on Friday that it had agreed to sell its MyFitnessPal training platform for up to $ 345 million to private equity firm Francisco Partners.
Premarket trading stocks rose more than 7%.
Here’s how the company performed in the third quarter of fiscal year compared to analyst expectations based on refinitive data:
- Earnings per share: 26 cents, adjusted compared to 3 cents, expected
- Revenue: $ 1.43 billion versus $ 1.16 billion expected
For the quarter ended September 30, Under Armor’s net income shrank from $ 102.3 million, or 23 cents per share, to $ 38.9 million, or 9 cents per share, last year. Excluding one-off costs, 26 cents per share were earned, which, according to Refinitiv estimates, exceeded expectations of 3 cents.
Revenue was roughly unchanged from a year ago at $ 1.43 billion, beating estimates of $ 1.16 billion.
In North America, sales decreased 5% to $ 963 million, while international sales increased 18% to $ 433 million.
Apparel sales decreased 6% to $ 927 million, while footwear sales rose 19% to $ 299 million and accessories sales increased 23% to $ 145 million. The boom in the footwear category is partly due to Under Armor launching its first women-specific basketball sneaker in the quarter.
Armor’s direct customer business, which includes website and store sales, grew 17% year over year. The global e-commerce business grew by more than 50% in the quarter.
Under Armor’s strategy has increasingly been to sell to customers more directly than through wholesale partners such as department stores. Wholesale sales decreased 7% to $ 830 million in the third quarter.
Under Armor plans to be more profitable this year compared to 2019 as less inventory is handled through off-price channels. However, it was pointed out that fourth quarter earnings will come under pressure due to the competitive promotions around the holidays.
Under armaments, profits at the close of Thursday’s market were down about 36% this year. The company has a market capitalization of $ 6.3 billion.
The full press release on the result can be found here.
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