Under Armour, the American sportswear company, has raised its profit outlook for fiscal year 2024, even as it reported a decline in sales in its largest market, North America. The company said it was able to improve its profitability by lowering its input costs and optimizing its inventory levels.
Profit beats expectations, revenue falls short
The company posted a net income of $114 million, or 26 cents per share, for the third quarter of 2024, up from $39 million, or 9 cents per share, a year ago. Adjusted for one-time items, the company earned 19 cents per share, beating analysts’ estimates of 17 cents per share.
However, the company’s revenue fell 6% to $1.5 billion, missing analysts’ expectations of $1.6 billion. The revenue decline was mainly driven by a 13% drop in wholesale revenue, which accounts for nearly half of the company’s total sales. The company said it faced lower demand from its wholesale partners, especially in North America, due to the ongoing impact of the COVID-19 pandemic and the supply chain disruptions.
North America remains a challenge, international grows
The company’s North American revenue, which represents about 60% of its total revenue, decreased 12% to $915 million. The company said it faced a challenging retail environment in the region, as well as increased competition from rivals such as Nike and Adidas.
On the other hand, the company’s international revenue, which represents about 40% of its total revenue, increased 7% to $566 million. The company saw growth in all its international regions, with Europe, the Middle East and Africa (EMEA) growing 7%, Asia-Pacific growing 7%, and Latin America growing 9%. The company said it benefited from its strong brand awareness and product innovation in these markets.
Apparel and footwear decline, accessories flat
The company’s apparel revenue, which represents about 65% of its total revenue, decreased 6% to $1 billion. The company said it faced lower demand for its training and team sports categories, as well as reduced promotional activity.
The company’s footwear revenue, which represents about 22% of its total revenue, decreased 7% to $331 million. The company said it faced lower demand for its running and basketball categories, as well as supply chain challenges.
The company’s accessories revenue, which represents about 7% of its total revenue, was flat at $105 million. The company said it saw growth in its headwear and bags categories, offset by declines in its gloves and belts categories.
Outlook improved, strategy reaffirmed
The company raised its full-year outlook, saying it expects its revenue to be down 3% to 4%, compared to its previous guidance of a 2% to 4% decline. The company also expects its gross margin to be up 120 to 130 basis points, its operating income to be between $287 million and $297 million, and its adjusted operating income to be between $310 million and $320 million. The company also expects its diluted earnings per share to be between 57 cents and 59 cents, and its adjusted diluted earnings per share to be between 50 cents and 52 cents.
The company reaffirmed its long-term strategy, saying it remains focused on strengthening its brand, enhancing its product portfolio, expanding its direct-to-consumer channel, and improving its operational efficiency. The company said it is confident in its ability to deliver sustainable and profitable growth in the future.
