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Under Armour: revenue down by 41%

Aug 14, 2020 United States
Under Armour: revenue down by 41%
The Baltimore-based sportswear company has announced second quarter results. The impact of the diffusion of COVID-19 was clear on the closure of stores. Revenue was down by 41% in the period
"With the majority of our own stores and wholesale locations closed for most of the second quarter due to the COVID-19 pandemic, while we performed better than expected, we still experienced a significant decline in revenue across all markets", commented Under Armour President and CEO Patrik Frisk. "Now, with most of these doors reopened, we are encouraged by some of the momentum we've experienced in June and July. However, we remain appropriately cautious with respect to the balance of 2020 due to continued uncertainty related to consumer shopping dynamics, the potential for a highly promotional environment and proactive decisions to reduce inventory purchases to be more aligned with anticipated demand related to ongoing COVID-19 impacts."

Second Quarter Review

Under Armour revenue was down by 41% in the second quarter to 708 million US dollars (down by 40% currency neutral) predominantly related to the COVID-19 pandemic impacts in the quarter. Wholesale revenue decreased by 58% to 299 million US dollars and direct-to-consumer revenue was down by 13% to 368 million US dollars.

North America revenue decreased by 45% to 450 million US dollars and revenue from our international business decreased by 34% to 224 million US dollars (down by 32% currency neutral). Within the international business, revenue decreased by 39% in EMEA (down by 37% currency neutral), decreased by 20% in Asia-Pacific (down by 17% currency neutral), and decreased by 72% in Latin America (down by 68% currency neutral).

Apparel revenue decreased by 42% to 426 million US dollars. Footwear revenue decreased by 35% to 185 million US dollars. Accessories revenue decreased by 47% to 56 million US dollars.

Gross margin increased 280 basis points to 49.3% compared to the prior year driven by channel mix which benefitted from significantly lower sales to the off-price channel, as well as a higher mix of direct-to-consumer sales, partially offset by the negative impacts from COVID-19 related discounting.

Net loss totaled 183 million US dollars. Adjusted net loss was 141 million US dollars. Diluted loss per share was 0.40 US dollars. Adjusted diluted loss per share was 0.31 US dollars.

COVID-19 Update
Due to ongoing uncertainty related to COVID-19 and its potential effect on global markets, the company continues to anticipate material impacts on its business results for the remainder of 2020. 

Channel Status and Trends
Through mid-May, the company estimated that approximately 80% of locations where the brand could be purchased globally were closed. As of today, with most of these doors having reopened, traffic trends continue to be considerably lower than the prior year period, however, the overall rate of conversion is higher. The company expects traffic trends to remain lower for the remainder of 2020. Additionally, the company experienced significant eCommerce growth around the world during the quarter.

Image credits: Models.com

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