Under Armor North American quarterly sales fell 14%, the company said on Thursday, and it adjusted its full-year profit guidance after settling years of securities litigation for $434 million.
Still, the company’s revenue and profit beat Wall Street expectations.
Here’s how the sportswear company’s fiscal first-quarter performance compared with Wall Street expectations, according to a survey of analysts by LSEG:
- Earnings per share: Adjust 1 cent Expected loss of 8 cents
- income: $1.18 billion vs. $1.15 billion expected
Under Armor lost $305.4 million, or 70 cents a share, in the three months ended June 30, compared with a profit of $10 million, or 2 cents a share, a year earlier. Excluding one-time charges, the company reported profit of $4 million, or 1 cent per share.
Sales fell to $1.18 billion, down about 10% from $1.32 billion a year earlier.
Under Armor agreed to settle a years-long securities lawsuit for $434 million in late June, about three weeks before the trial began. In 2017, Under Armor was accused of deceiving shareholders about revenue growth to meet Wall Street expectations.
The company said in a news release that it did not admit negligence or wrongdoing but agreed to end the case about seven years after it was filed because of the “costs and risks inherent in litigation.” Under Armor said it will pay the settlement using cash from its revolving credit facility.
The company now expects to post a loss in fiscal 2025.
Under Armor previously forecast full-year earnings per share of 2 cents to 5 cents, and adjusted earnings of 18 cents to 21 cents per share.
The sportswear company is embarking on a broad restructuring plan in an effort to regain relevance, reverse declining sales and boost profits. Earlier this year, Under Armor said it would lay off an unspecified number of employees, cut promotions and discounts, and streamline its product offerings to become more competitive. it also wants to stand out from Nike’s script and position Under Armor as a premium brand.
The restructuring comes two months after the previous Marriott Under Armor CEO Stephanie Linnartz was fired, and founder Kevin Plank was once again at the helm.
Plank said in a statement on Thursday that the company was “encouraged by the early progress” of its efforts. But sales in the Under Armor business still declined this quarter.
In North America, Under Armor’s largest market, sales fell 14% to $709 million, according to StreetAccount, but were better than analysts’ expectations of $669.1 million. Wholesale revenue fell 8% to $681 million, while direct-to-consumer sales fell 12% to $480 million.
Sales at Under Armor owned and operated stores fell 3%, while online sales plunged 25%, a decline the company attributed to “planned reductions in promotions.”
Apparel revenue fell 8%, footwear sales fell 15% and accessories revenue fell 5%.
Under Armor is recruiting new talent and expanding into sustainable fashion as it looks to return to growth and position itself as a premium retailer in the crowded sportswear space.
On Tuesday, the retailer announced it has acquired sustainable fashion brand Unless Collective and will hire the brand’s founder, the former Adidas-Executive Eric Liedtke as executive vice president of brand strategy.
A press release about the acquisition stated: “Eric will be responsible for expanding Under Armor’s brand identity and storytelling globally, a comprehensive strategic planning process, and executing transformational initiatives to accelerate UA’s growth, while continuing to lead and orchestrate unless This is the case.
“He will report to President and CEO Kevin Plank and oversee UA’s strategic functions through category marketing, consumer intelligence, creative, marketing operations, loyalty, social media, sports marketing and all strategic functions,” the release states. Brand.
Unless calls itself “the world’s first all-plant, plastic-free recycled fashion brand” and says it was created to prove that plants can replace plastic in clothing and footwear manufacturing.
Read the full earnings report here.
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