Global growth helps Under Armour beat Q1 expectations amid turnaround progress
Under Armour reported a strong first quarter as inventory controls and international growth helped make up for falling sales at home.
The athletic apparel and footwear retailer reported income of $22 million, or 5 cents a share, for the quarter ended March 31. Analysts had expected earnings to break even.
Revenue totaled $1.21 billion, higher than the $1.18 billion analysts had expected. Sales in North America fell 3% to $843 million, while international revenues grew 12%, to $328 million. Revenues from international markets now make up 27% of Under Armour’s total sales.
Under Armour has been challenged with disappointing sales in North America amid increased competition from the likes of Nike, adidas and even Lululemon. The athleisure trend has also impacted its sales. The retailer is in the third year of a turnaround plan that includes focusing on its athletic performance roots (as opposed to fashion) and product innovation. The plan is designed to help Under Armour operate more efficiently and increase the speed with which it brings new products to market.
Under Armour is also working to reduce inventories to enhance the brand’s premium status.
On the company’s earnings call, COO Patrik Frisk told analysts that the brand has “stabilized” in North America, as it continues to move to selling more merchandise at “premium” price points, and consequently pulling out of some discount channels.
“Our first quarter results demonstrate our unwavering commitment to protecting and growing our premium performance athletic brand through a disciplined go-to-market process that delivers innovative products and experiences to make athletes better,” CEO Kevin Plank said in a statement. “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.”