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Under Armour swings to loss in the transition quarter

By Prachi Singh

6 May 2022

Image: Under Armour

For the transition quarter ended March 31, 2022, Under Armour, Inc. reported revenue increase of 3 percent or 4 percent currency neutral to 1.3 billion dollars compared to the prior year.

The company recorded net loss of 60 million dollars and adjusted net loss of 3 million dollars for the period under review. Diluted loss per share was 13 cents, while adjusted diluted loss per share was 1 cent.

"Having successfully executed a multi-year transformation and after delivering a record year in 2021 – we are continuing to serve the needs of athletes amid an increasingly uncertain marketplace," said Under Armour president and CEO Patrik Frisk in a statement.

Highlights of Under Armour’s unaudited financial results

The company’s wholesale revenue increased 4 percent to 829 million dollars and direct-to-consumer revenue increased 1 percent to 441 million dollars, driven by 2 percent growth in ecommerce, which represented 45 percent of the total direct-to-consumer business during the quarter. The company-owned and operated store revenue growth was flat during the quarter.

North America revenue increased 4 percent to 841 million dollars and international revenue increased 1 percent or 3 percent currency neutral to 456 million dollars. Within the international business, revenue increased 18 percent or 22 percent currency neutral in EMEA, decreased 14 percent or 13 percent currency neutral in Asia-Pacific and decreased 6 percent or 5 percent currency neutral in Latin America.

Apparel revenue increased 8 percent to 877 million dollars. Footwear revenue decreased 4 percent to 297 million dollars and accessories revenue decreased 18 percent to 97 million dollars.

Gross margin decreased 350 basis points to 46.5 percent compared to the prior year, driven primarily by elevated freight expenses. Operating loss was 46 million dollars, while adjusted operating income was 11 million dollars.

Under Armour expects 5 to 7 percent revenue growth in FY23

Based on current visibility, including ongoing supply chain challenges, Covid-19 uncertainty, and inflationary trends, Under Armour expects fiscal year 2023 revenue to increase 5 to 7 percent versus the comparable baseline period of 5.7 billion dollars, reflecting a mid-single-digit growth rate in North America and a low-teens growth rate in the international business.

Gross margin is expected to be down 150 to 200 basis points compared to the baseline period's adjusted gross margin of 49.6 percent. Operating income is expected to reach 375 to 400 million dollars versus the comparable baseline period adjusted operating income of 424 million dollars.

Diluted earnings per share is expected to be between 79 cents and 84 cents versus the comparable baseline period of 47 cents. Adjusted diluted earnings per share is expected to be between 63 cents and 68 cents. This is comparable to the adjusted baseline period of 68 cents.