Under Armour Sees Green Shoots in Q3, Raises Projections
Improving demand in North America and Asia as well as a decline in promotions led Under Armour to beat analyst expectations in the third quarter, and prompted the Baltimore-based sports brand to raise its outlook for the fiscal year.
On Thursday morning, Under Armour reported operating income for the quarter ended Dec. 31, 2024 of $14 million. Excluding impairment charges, transformation expenses, and restructuring charges, adjusted operating income was $60 million. Net income was $1 million and adjusted net income was $35 million. Quarterly adjusted earnings per share were 8 cents, beating estimates of 3 cents a share, according to FactSet.
Revenue in the period fell 6 percent to $1.4 billion and North America sales decreased 8 percent to $844 million. International revenue decreased 1 percent to $558 million with sales in the EMEA up 5 percent, down 5 percent in Asia-Pacific, and down 16 percent in Latin America.
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Wholesale revenue decreased 1 percent to $705 million, and direct-to-consumer revenue was down 9 percent to $673 million. Revenue from owned and operated stores declined 1 percent, while e-commerce ales were down 20 percent, a drop the company attributed to planned decreases in promotional activities. Overall, e-commerce accounted for 39 percent of the total direct-to-consumer business in the quarter.
By category, apparel revenue decreased 5 percent to $966 million, footwear revenue was down 9 percent to $301 million, and accessories revenue was up 6 percent to $110 million.
While the figures indicate a company still struggling to return to its former glory, they also beat analyst expectations and the company’s stock was up in pre-market trading. FactSet had been expecting revenues of $1.3 billion in the period.
“We are pleased our quarterly results exceeded expectations,” said Kevin Plank, Under Armour’s president and chief executive officer. “As we sharpen our focus on strengthening the Under Armour brand, our updated product strategy and enhanced marketplace discipline combined with the shift to a category-led operating model are driving our transformation.
“Additionally, we will enter a pivotal new chapter in our marketing strategy by launching a dynamic, multi-year initiative of storytelling that showcases our incredible products, talented athletes, and influential creators,” he added. “This will greatly enhance our visibility and empower our authentic connection with athletes to elevate our brand like never before.”
As a result, Under Armour is now expecting revenue to decline by approximately 10 percent in fiscal 2025, compared to the prior expectation of a low double-digit percentage decline. This includes an expected 12 to 13 percent decline in North America versus the previous expectation of a 14 to 16 percent decline, and a mid-single-digit decrease in international sales compared to the prior expectation of a low single-digit decline. In the international business, the company is still expecting flat results in EMEA and a low-teen percent drop in the Asia-Pacific region compared to the prior expectation of a high single-digit decline.
The operating loss is now expected to be $179 to $189 million, compared to the previous expectation of $176 to $196 million. Excluding anticipated restructuring charges and transformation expenses, litigation settlement expenses and related insurance recoveries and impairment charges, adjusted operating income is expected to be $185 to $195 million, compared to the prior expectation of $165 to $185 million.
Under Armour is in the midst of a restructuring plan to improve its financial position. Plank, who founded Under Armour, 28 years ago, returned to the helm last spring and mapped out a plan to return the company to growth. That included the closing of a distribution center in Rialto, Calif., announced in the fall, that brought the company’s pretax and restructuring charges to between $140 million and $160 million for this fiscal year.
Plank told WWD in December that it would take until at least the fall of 2025 for the results to show on the bottom line.
