WWD Digital Daily

Under Armour Underwhelm­s In Quarter, Stock Sinks

● The company wrapped up a restructur­ing plan, but saw losses in a transition­al quarter that left shareholde­rs wanting more.

- BY EVAN CLARK

Patrik Frisk still has something to prove to investors.

Shares of Under Armour Inc., which Frisk leads as chief executive officer, dropped 26 percent to $9.84 on Friday, after the company posted a small loss in the most recent quarter and projected annual earnings that fell short of analysts estimates.

Like many other fashion companies, Under Armour has been retooling in recent years and Frisk argued that the company has grown much stronger and healthier and is ready to take off — when the world gets back to normal.

But normal still seems a ways off.

Frisk acknowledg­ed on a conference call with analysts on Friday that results for the most recent quarter “came in lighter than we had expected due to ongoing supply challenges and emerging COVID-19 impact on our Asia Pacific business.”

And the dynamic isn’t going anywhere soon.

“These trends, which we believe to be temporary, are also expected to impact how fiscal ‘23 is shaping up,” the CEO said.

During the “transition­al” quarter, which ended March 31 and sets the company’s new fiscal calendar, net losses tallied $59.6 million, or 13 cents a diluted share, and compared with earnings of $77.8 million, or 17 cents, a year earlier.

Gross margins decreased 350 basis points to 46.5 percent of sales, driven mostly by higher freight expenses amid the global supply chain back up, while higher expenses and restructur­ing and impairment charges also weighed on the quarter.

On an adjusted basis, the company said losses were $3 million, or 1 cent a share.

Revenues inched up 3.5 percent to

$1.3 billion from $1.26 billion a year ago. Wholesale sales grew 4 percent to

$829 million as the brand’s direct-toconsumer revenues increased to

$441 million. Apparel revenues increased 8 percent to $877 million while footwear slipped 4 percent to

$297 million and accessorie­s fell 18 percent to $97 million.

Frisk reaffirmed confidence in the company’s long-term growth potential despite the “near-term headwinds.”

“The engine that makes this model work most efficientl­y is profitable top-line growth,” he said “This is my number-one priority as CEO. We believe our directto-consumer, footwear, women’s and internatio­nal businesses will drive this growth over the long term.

“Under Armour is a growth company with an incredible opportunit­y ahead of us,” he said. “Our fundamenta­ls are strong. Our underlying brand strength is improving, and our confidence remains unchanged.”

 ?? ?? Patrik Frisk
Patrik Frisk

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