Under Armour gets boost from international sales
Under Armour chief executive and chairman Kevin Plank believes the company’s restructuring efforts are working. Rise in overseas revenue offsets North American decline as firm raises earnings outlook
Under Armour Inc. posted higher revenue in the third quarter, driven by growth in its international business, and the sports-apparel company raised its profit outlook for the year.
Sales at the Baltimore company increased 2% to $1.4 billion (U.S.) in the three months ended Sept. 30, as higher demand overseas helped offset declines in North America.
Under Armour Chief Execu- tive and Chairman Kevin Plank said the results are a sign that the company’s restructuring efforts are working.
The past two years “have served as one of the most challenging yet productive and opportunistic times in our history,” he said on a conference call Tuesday.
Shares of Under Armour rose more than 15% in premarket trading.
Under Armour has been restructuring after sales growth began to stall last year.
The company has eliminated hundreds of jobs, reduced spending on endorsement deals and cut back its product offering.
The company said it expects to incur about $200 million to $220 million in pre-tax charges in connection with its restructuring plan.
Revenue in North America declined 2% to $1.1billion, while the international business increased 15% to $351 million. Sales from the company’s wholesale channels increased 4% to $914 million, while revenue from its own stores and website was flat at $465 million. Under Armour is “caught in a difficult position” as it faces more competition in the athleisure and sportswear market, said Neil Saunders, managing director of GlobalData Retail.
“It has neither the brand power or muscle to be a Nike, but nor is it nimble or niche enough to generate the strong appeal of a smaller label,” he wrote in a note on Tuesday.
The company raised its fullyear adjusted earnings-pershare guidance to between 19 cents and 22 cents from a prior guidance of 16 cents to 19 cents. The company expects revenue to increase 3% to 4%.
Apparel is expected to grow at a rate in the mid-single digits, footwear at low single digits and accessories is now expected to decline in the mid-single digits.