Under Armour Q4 tops estimates amid global growth; North American sales fall
Under Armour released fourth quarter results that show it still has a ways to go in reviving its business here at home.
The athletic goods giant reported a net loss of $87.9 million, or 20 cents a share, in the quarter ended Dec. 31, compared with net income of $103 million, or 23 cents per share, in the year-ago period. The results included a one-time charge of $39 million due to the new U.S. tax law and restructuring charges. Excluding one-time items, the company met Street estimates that it would break even for the quarter.
Total revenue rose 5% to $1.37 billion, better than the $1.31 billion analysts were expecting. Direct-to-consumer revenue was up 11% to $575 million.
Sales in international markets surged 47% and represented 23% of total sales. Sales in North America, however, continued to decline and were down 4%.
For the full year, sales increased 3% to $5 billion. North America revenue fell 5%.
Neil Saunders, managing director of GlobalData Retail, commented that while Under Armour’s overseas growth is to be applauded, the brand is reliant on its North American operation to drive performance on both the top and bottom lines. As to why Under Armour is lagging domestically, Saunders cited several factors, including that its expansion into retailers like Kohl’s has weakened exclusivity and made the brand feel commoditized and ubiquitous.
“Consumers are unsure of what it (Under Armour) stands for, what it specializes in, and why they should use it,” Saunders said. “For many, it has become something of an also-ran.” (For more, click here.)
Under Armour has been working to transform its business amid fierce competition by such rivals as Nike and Adidas and online players. The company said on Tuesday it would expand its restructuring efforts, including closing facilities and terminating leases, resulting in a pre-tax charge between $110 million and $130 million this year.
“2017 was a catalyst for us to begin strategically transforming Under Armour into an operationally excellent company,” stated CEO Kevin Plank. “Our fourth quarter and full year results demonstrate that the tough decisions we’re making are generating the stability necessary to create a more consistent and predictable path to deliver long-term value to our shareholders.”
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