Under Armour on Tuesday raised its sales and profit outlook for the full year, as the sports apparel maker sees demand for its brand roaring back with shoppers returning to its stores.
It reported first-quarter sales growth of 35%, topping analyst expectations. The company is lapping a period a year earlier when its stores were temporarily shut, and Under Armour had to turn to layoffs and other cost-cutting measures to fight through the health crisis.
“On a two-year stack, that is skipping over 2020, we’re running a better, higher quality and more profitable business,” CEO Patrik Frisk said during an earnings conference call.
Under Armour’s stock was recently down around 3.5% after jumping more than 3% in premarket trading.
Here’s how the company did during its quarter ended March 31 compared with what analysts were anticipating, based on a Refinitiv survey:
- Earnings per share: 16 cents adjusted vs. 3 cents expected
- Revenue: $1.26 billion vs. $1.13 billion expected
Under Armour’s net income grew to $77.8 million, or 17 cents per share, compared with a loss of $589.7 million, or $1.30 per share, a year earlier.
Excluding one-time charges, the company earned 16 cents per share, better than the 3 cents that analysts were anticipating, based on Refinitiv estimates.
Sales rose to $1.26 billion from $930.2 million a year earlier, beating estimates for $1.13 billion.
In North America, sales were up 32%, while they grew 58% in Under Armour’s smaller international division, boosted by recoveries in markets that include China.
Online sales rose 69% across the business.
Frisk said the company is seeing strong demand for the brand, as business rebounds across Asia and North America. In the year-ago period, Under Armour’s sales tumbled more than 20%, as its business took a blow from the coronavirus pandemic and its stores were forced shut, freezing its turnaround efforts.
The company has also worked on managing its inventories and reducing its reliance on discounting to get rid of dated merchandise. Frisk said those efforts are paying off and helping to boost profits.
BMO Capital Markets analyst Simeon Siegel said he expects demand at Under Armour to be a beneficiary from “the current trifecta of stimulus, vaccines and light industry-wide inventory.”
“We believe margin growth is very real and sustainable,” Siegel said in a note to clients Tuesday.
In its second quarter, Under Armour said sales should rise upwards of 70%, led by the strongest growth in North America and Latin America, as the company laps additional pandemic-related closures in 2020.
The company expects to realize roughly $35 million to $40 million in restructuring charges during the quarter.
With these improved trends, Under Armor raised its annual forecast. It now expects full-year revenue to rise by a high-teen percentage rate, compared with a previous outlook of a high-single-digit increase. Analysts had been looking for 10.1% growth, according to a Refinitiv survey.
It’s calling for 2021 adjusted earnings per share to be in the range of 28 cents to 30 cents, compared with a prior range of 12 cents to 14 cents. Analysts had been calling for earnings per share of 20 cents.
On Monday, Under Armour said it agreed to pay the Securities and Exchange Commission $9 million to settle charges that it mislead investors from 2015 to 2016 by recording $408 million in sales that it expected to complete in future quarters.
The retailer settled the charges without admitting or denying the findings in the SEC’s order. Under Armour had also been responding to requests for documents and information from the U.S. Department of Justice, and said Monday that it hasn’t received any requests from the DOJ since the second quarter of 2020.
As of Monday’s market close, Under Armour shares are up more about 40% year to date. The company has a market cap of $10 billion.
Find the full earnings press release from Under Armour here.
WATCH LIVE: Under Armour CEO Patrik Frisk will join CNBC’s Closing Bell for an exclusive TV interview on Tuesday at 3 p.m.
Source: Business - cnbc.com
