(Bloomberg) — Under Armour Inc.’s earnings beat was marred by concerns about supply-chain issues that the athletic-wear company said will have “material impacts” on the spring-summer season and potentially beyond.
- Revenue rose 9% to $1.53 billion in the fiscal fourth quarter, the company reported Friday. That topped the $1.47 billion average of estimates compiled by Bloomberg. Adjusted earnings were 14 cents a share, while analysts expected 6.5 cents.
- For the current quarter, Under Armour sees revenue growing at a mid-single-digit rate, compared with its November forecast for growth in the low-single digits. However, reductions in spring and summer orders caused by supply constraints will reduce revenue by about 10 percentage points, the company said.
Key Insights
- Logistics woes persisted as Under Armour used costly air freight to circumvent supply-chain bottlenecks. Gross margin is expected to be down by two percentage points in the current quarter because of higher freight expenses and expectations for greater sales of less profitable products, partially offset by higher pricing.
- The company forecast earnings for the current quarter at 2 cents to 3 cents a share. That would be down from 17 cents a year ago.
- Management has been pulling back from some wholesale partners for the past six months to focus on higher-quality sales. Direct-to-consumer revenue climbed 10% for the fourth quarter, while wholesale rose 16%.
- While Under Armour typically has provided a full-year outlook in February, the company is switching to a fiscal year that will begin April 1 and won’t provide its initial guidance for fiscal 2023 until early May. Analysts at Truist Securities said ahead of Friday’s release that investors probably won’t gain confidence until they know more about the company’s long-term growth prospects.
Market Reaction
- The company’s Class A shares fell 1.4% at 8:52 a.m. before the start of regular trading in New York. The stock had declined 5.6% this year through Thursday’s close.
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- Additional coverage
- Company statement
(Updates with forecast in second Key Insight.)
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