Under Armour Rises as Sales, Full-Year Guidance Both Beat
(Bloomberg) -- Under Armour Inc. jumped the most in more than six months after posting third-quarter sales that beat estimates, a sign the sportswear brand is getting a boost from consumer preference for comfy sportswear in 2020.
- Sales in the quarter ended in Sept. 30 were $1.4 billion, beating the average estimate of $1.2 billion from analysts surveyed by Bloomberg. Revenue has stabilized and was flat year over over after two quarters of big declines due to the pandemic.
- It was online ordering, not physical stores, that drove the beat. The company’s direct-to-consumer revenue increased 17% to $540 million, driven by continued strong growth in e-commerce. Wholesale revenue dropped as department stores and other retailers who carry the brand saw a decline in foot traffic.
- In a sign of its move to de-emphasize physical stores, the company will reduce some North America distribution points, executives said on a conference call with investors. The goal is to cut 2,000 to 3,000 distribution points in the region and have about 10,000 total by 2022.
- Under Armour also upped its guidance for the year. Revenue is now expected to be down at a high-teen percentage rate this fiscal year. It will drop by a low-teen percentage rate for the fourth quarter, better than the previous expectation for a 20% to 25% drop. Inventory is also expected to be up approximately 10% at the end of this year.
- Shoes were a bright spot. Even though apparel revenue decreased 6%, the footwear segment saw a boost of 19% and accessories revenue increased by 23%. That reflects the trend of more Americans exercising at home.
- The company also announced it would be selling its MyFitnessPal fitness-tracking app to Francisco Partners, a private equity firm, for $345 million. Under Armour bought it five years ago.
- Under Armour’s shares rose as much as 12% in New York trading on Friday. They had dropped 37% this year through Thursday’s close, while the Standard & Poor’s 500 Index gained 2.5%.
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