Under Armour rallies after global push helps ease slump at home

Under Armour Inc. has renewed faith it can bounce back from the worst slump in its history, as robust international growth cushions weakness on the home front.

The athletic-wear company reported fourth-quarter revenue that topped projections, led by a 47 per cent increase in sales outside North America. That helped drive the stock up as much as 18 per cent on Tuesday, the most in more than two years.

The results provide optimism that Baltimore-based Under Armour can restore its cachet as a trail-blazing athletic brand. They also may help dispel broader concerns about a slowdown in the sportswear industry. Nike, the market leader, has seen sales slump in recent quarters, especially in North America.

“The dynamic landscape of 2017 was a catalyst for us to begin strategically transforming Under Armour,” CEO Kevin Plank said in a statement.

Under Armour was an investor darling as recently as two years ago. At the time, NBA star Stephen Curry’s shoe line was pumping life into its sneaker business, helping boost 2015 revenue 29 per cent. Since then, a comeback by Adidas has hurt the company. Consumers are also opting for more stylish sportswear, rather than the performance features that are Under Armour’s specialty.

Plank embarked on a comeback plan, calling 2017 a “reset year.” He has made management changes, including a new chief operating officer and finance head, and admitted that — like many young companies — it grew too fast. A restructuring plan includes writing down inventory and other underperforming assets. The brand also hired designers to make its apparel more fashionable.

The changes show signs of paying off. Under Armour shares rose as high as $16.86 in New York, in their biggest intraday gain since January 2016. The stock had lost about a third of its value in the past 12 months, and was the worst-performing equity in the S&P 500 last year.

Apparel, footwear and accessories all saw gains last quarter. Under Armour sales reached $1.37 billion, compared with the average projection of $1.31 billion. Excluding some items, earnings per share were flat.

While sales from North America — where Under Armour gets about three-quarters of its revenue — fell 4.5 per cent, the decline slowed from a 12 per cent drop the previous quarter. It also reported a 56 per cent increase in Asia-Pacific revenue, a 46 per cent gain in the Europe, Middle East and Africa region and 36 per cent growth in Latin America.

As part of a plan to scale back operations, the company will reduce how many products it makes by as much as 40 per cent by the end of 2019. It also continued to reduce expenses, by announcing another round of cost cutting and restructuring for this year that it said will result in as much as $130 million in charges.