Under Armour shows signs of comeback after strong quarter
Under Armour shares jumped more than 20 percent on Tuesday after a strong quarterly earnings report revealed signs that the embattled sports apparel brand is making a comeback.
The Baltimore-based company said third-quarter sales increased 2 percent to $1.4 billion, with earnings of 25 cents per share. Both figures topped Wall Street’s expectations, according to Refinitiv data.
Strong international sales drove the positive results, as overseas revenue rose 15 percent to $351 million. The international growth helped Under Armour to weather a 2 percent sales decline in a competitive North American marketplace, where the brand has struggled to compete with industry leaders Nike and Adidas.
"Our third quarter results demonstrate that our multi-year transformation is on track," said Under Armour CEO Kevin Plank. "As we work through this chapter, we are staying sharply focused on our brand by connecting even more deeply with our consumers while delivering industry-leading, innovative products and premium experiences.”
The positive results came amid a lengthy effort by Under Armour to overhaul its business after roughly two years of sagging sales in a shifting retail landscape. The company has laid off hundreds of employees, cut back on sponsorship deals and refocused on product development.
Under Armour said it expects $200 million to $220 million in pre-tax charges related to its restructuring plan.
Improved quarterly results show that Under Armour is “making process, [but] still not in full recovery mode,” according to GlobalData retail analyst Neil Saunders. Subpar sales in North America are of particular concern.
“The Under Armour brand is still unfocused and confusing for customers, especially on the product side,” Saunders wrote in a note. “Although the assortment has some good individual pieces, the entire range is a hodgepodge with no clear focus or specialism. There was once a view that having lots of stuff provided customers with choice but, in actuality, it has just created bewilderment. This hampers Under Armour's ability to tell compelling brand stories which should allow it to stand out in a crowded marketplace.”