Under Armour shares got a lift on Thursday after the company reported better-than-expected results for the second quarter.
The Baltimore-based brand reported revenues of $1.6 billion, up 2% over last year. Net income was $87 million and adjusted diluted earnings per share was $0.20. Both earnings and revenues exceeded the expectations of analysts surveyed by FactSet.
By category, apparel revenue decreased 2% to $1 billion and footwear revenue increased 14% to $376 million. Growth in footwear was led by the team sports business, especially in the Curry business and across basketball, football and baseball.
“Our momentum in footwear, which we expect to continue for the balance of the year is encouraging proof that our innovation is resonating,” said CFO David Bergman in a call with investors.
Under Armour shares closed up almost 12% on Thursday.
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Despite these results, Under Armour lowered its outlook for the fiscal year of 2023 and now expects revenue to grow at a low single-digit percentage rate. Diluted earnings per share is expected to be between $0.56 and $0.60. By region, North American revenue is expected to be flat and international business is expected to be up at a mid-single-digit rate. The apparel business is expect to be flat and the footwear business is projected to have growth in the low teens.
The downgraded sales outlook was partially due to a “challenging retail environment” and headwinds from foreign exchange, interim president and CEO Colin Browne said in call with investors.
“Elevated inventories, including late-arriving products across our sector, higher levels of discounting and promotions and softer retail trends have impacted how we see the rest of fiscal ’23 playing out,” Browne said.
Going into Q4, Bergman said he expects the largest headwind to come from foreign currency rates. Higher promotional rates will also be a headwind, but will likely have less of an impact as it did in Q3.
Overall, Browne said he was optimistic about growth in 2024, given Under Armour’s “pivot to growth that brings with it a certain swagger and a certain confidence.”
“I think we feel as if we’re well positioned to close out the year and grow into 2024,” he said.
