Companies

Under Armour lowers full year outlook

Nov 9, 2022 United States

The Baltimore-based company has slightly lowered its fiscal 2023 guidance despite reporting second quarter results in line with expectations. Footwear segment was the only one to grow

"We're pleased to have delivered second-quarter results that were in line with our expectations. While we anticipate the immediate macroeconomic backdrop to stay uncertain – we are taking a balanced approach to mitigate near-term pressures while continuing to focus on the long-term strength of our brand. By leaning into these strengths – performance product innovation, deep consumer connections, and empowering athletes – our team is working tirelessly across multiple growth opportunities", commented Under Armour Interim President and CEO Colin Browne.

Second Quarter Results

(Under Armour began its new fiscal year 2023 on the 1st of April 2022, so the comparable baseline period is the 1st of April 2021, through the 31st of March 2022)

In the second quarter of fiscal 2023, the company's revenue increased by 2% (by 5% currency neutral), reaching 1.6 billion US dollars, on a comparable basis to the same period of the prior year.

While its wholesale revenue grew by 4% in the three months to the 30^th of September, totalling 948 million US dollars, direct-to-consumer revenue declined by 4%, amounting to 577 million US dollars, as compared to a similar period of fiscal 2022. E-commerce revenue increased by 4% in this period, representing 36% of the total direct-to-consumer business during the second quarter.

Under Armour reported a revenue decrease of 2% in the North American region to 1.01 billion US dollars in the second quarter of the current fiscal year, but revenue growth of 7% (up by 16% currency neutral) in the international business that amounted to 547 million US dollars, on a comparable basis to the same quarter of the last fiscal year.

In this period, the company's apparel segment revenue was down by 2%, totalling 1 billion US dollars, whilst the footwear segment revenue increased by 14%, reaching 376 million US dollars, as compared to the same period of fiscal 2022. Accessories segment revenue dropped by 12% to 111 million US dollars.

The Baltimore-based company's gross margin contraction of 560 basis points in the second quarter of fiscal 2023 to 45.4%, as compared to the second quarter of the last fiscal year, "driven primarily by higher promotions, elevated freight expenses related to COVID-19 supply chain impacts, unfavourable channel mix, and the negative impact of changes in foreign currency".

Under Armour's net income totalled 87 million US dollars in the three months to the 30th of September, from 113.4 million US dollars in the same period of the prior fiscal year; adjusted net income was 92 million US dollars. Accordingly, it reported diluted earnings per share of 0.19 US dollars and adjusted diluted earnings per share of 0.20 US dollars.

Fiscal 2023 Outlook

For the full year 2023, the company is expecting revenue to grow at a low single-digit percentage rate, as compared to the previous guidance of 5 to 7% growth, mainly due to a "more challenging retail environment and additional negative impacts from changes in foreign currency". Moreover, it now anticipates diluted earnings per share between 0.56 US dollars to 0.60 US dollars, as compared to the previous guidance of 0.61 US dollars to 0.67 US dollars.

Image Credits: about.underarmour.com

United States Companies Footwear Quarter Results Results Sportswear Under Armour