USA TODAY International Edition
Under Armour shares dive as it lowers forecast
Under Armour shares fell more than 14% Tuesday after the sports apparel maker lowered its expected growth through 2018.
The Baltimore- headquartered maker of sports gear and shoes last year had forecast goals of $ 7.5 billion in revenue and $ 800 million in earnings before interest and taxes ( EBIT) by 2018. As part of its third- quarter earnings release, Under Armour reiterated its revenue goal but modified its EBIT forecast down to expected growth over 2017 and 2018 in the low 20 percentages.
Wall Street had expected EBIT growth of 30% in 2017 to $ 588 million and 28% growth in 2018 ($ 751.7 million), based on analysts polled by S& P Global Intelligence.
“While we expect to continue to significantly outpace the apparel industry, the growth rate going forward will be less than expected from our Investor Day in 2015,” UA Chief Financial Officer Lawrence Molloy said in a conference call after the earnings release.
For the current quarter, Under Armour sprinted past expectations with earnings of 29 cents, surpassing the 23 cents in the July- September period a year ago.
That performance also beat expectations of 25 cents.
Under Armour’s third- quarter net income of $ 128.2 million rose 28%, up from $ 100.5 million a year ago , beating expectations of $ 110.9 million.
Revenue rose 22% to $ 1.47 billion, compared with $ 1.20 billion last year, surpassing expectations of $ 1.45 billion.
But investors were focused on the future. Under Armour shares fell 13% to $ 32.89 Tuesday after the company released its thirdquarter earnings. Shares are down 30% over the past six months.
Several factors led to the growth revision, said CEO Kevin Plank. As overall apparel sales were slowing, Under Armour’s apparel remained “incredibly profitable and still growing” at about 18% in the third quarter.
Under Armour will expand to Kohl’s next year and will improve its direct to consumer sales, he said.