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Under Armour with flat quarter's revenue

Dec 7, 2020 United States
Under Armour with flat quarter's revenue
The Baltimore-based giant has reported third quarter results, marked by flat revenue at 1.4 billion US dollars, driven by growth in the international business and e-commerce
"Our third-quarter results reflect considerably better than expected performance due to higher demand and our strong execution, especially in North America", commented Under Armour President and CEO Patrik Frisk, adding: "We believe that the critical mass of our transformational challenges is behind us, and we remain sharply focused on operational improvements and financial discipline to accelerate strategies to create sustainable, long-term growth for the Under Armour brand and our shareholders."

Third Quarter Review

Revenue was flat at 1.4 billion US dollars compared to the prior year. Wholesale revenue decreased by 7% to 830 million US dollars and direct-to-consumer revenue increased by 17% to 540 million US dollars, driven by continued strong growth in e-commerce.

North America revenue decreased by 5% to 963 million US dollars and international revenue increased by 18% to 433 million US dollars (up by 17% percent currency neutral). Within the international business, revenue increased by 31% in EMEA (up by 26% currency neutral), increased by 15% in Asia-Pacific (up by 16 percent currency neutral), and decreased by 15% in Latin America (down by 7 percent currency neutral).

Apparel revenue decreased by 6% to 927 million US dollars. Footwear revenue increased by 19% to 299 million US dollars. Accessories revenue increased by 23% to 145 million US dollars.

Gross margin decreased 40 basis points to 47.9% compared to the prior year, driven primarily by negative impacts from COVID-19 related discounting and product mix partially offset by supply chain efficiencies and channel mix. Net income in the period reached 39 million US dollars. Adjusted net income was 118 million US dollars.

Fiscal 2020 Outlook

Due to ongoing uncertainty related to COVID-19 and its potential effect on global markets, the company expects "material impacts on its business results for the remainder of 2020 and into 2021". Revenue is expected to be down at a high-teen percentage rate compared to 2019 results, reflecting a low twenties percentage rate decline in North America and a high-single-digit percentage rate decline within the international business. For the fourth quarter, the company now expects revenue to be down at a low-teen percentage rate, versus the previous down 20% to 25% expectation.

COVID-19 Update

The vast majority of locations where Under Armour is sold are now open. In the company's owned and operated retail stores, traffic trends remain challenged; however, conversion trends remain strong. The company experienced significant eCommerce growth around the world during the quarter. The fourth quarter and full-year outlook provided assume the vast majority of retail locations where Under Armour is sold will continue to remain open for the remainder of the year.

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