Under Armour beats profit expectations, shares continue to climb
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Under Armour beats profit expectations, shares continue to climb

Athletic apparel and footwear maker Under Armour reported earnings for the fourth quarter last week that beat analysts’ expectations and propelled its share price – which has climbed consistently this year – upwards. The company’s success was almost entirely international, which paints a conflicting picture of its success: on the one hand, it’s clearly reconnecting with customers around the world; on the other, performance in its domestic market (the US) was underwhelming. Despite poor US sales, the brand’s continued optimism over its position there and the general health of every other metric it reported has allayed investor concerns, and Under Armour’s share price rose by 3.5% on the day.

Under Armour’s share price has appreciated by 24% so far this year

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Source: Yahoo Finance

Under Armour reported earnings of 5c per share for the quarter that ended March 31. That’s a clear win against analysts’ expectations, which were for the brand to break even. Analysts had also been overly pessimistic on sales, expecting to see a 0.3% decline against the year-ago quarter to $1.18 billion. In fact, the company managed a 2% increase to $1.20 billion. The company’s aims to restructure and stabilise the business are clearly paying off, and the previous slide in sales looks to be reversing.

In an announcement, the company’s founder, chairman, and CEO, Kevin Plank, said: “As we execute against our long-term plan, Under Armour will emerge from 2019 and our 'Protect This House' chapter as an even stronger brand and company.”

On the company’s earnings call, president Patrik Frisk discussed the strength of the North American economy and the brand’s performance there, saying: “It’s a much healthier marketplace, and we clearly see that when we’re providing newness into the channels, it really works really well for us. We’re going to continue that work with our retail partners. … Earning it back takes a little time and that’s really what you’re seeing from the brand now.”

Disclosure

Dominion holds Under Armour in its Global Trends Luxury Fund.


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