Under Armor (UAA) Announces Second Quarter 2020 Results Beaten


Under Armor said on Friday that its fiscal second quarter revenue fell 41%, but its results were overall better than the retailer expected thanks to an increase in e-commerce.The sneaker maker estimated that around 80% of the stores where its merchandise can be purchased, including its own stores, were closed due to the coronavirus pandemic until mid-May.

Selling directly to customers made its sales more profitable, and items sold through low-cost channels were less of a nuisance. As a result, its gross margins strengthened by 280 basis points to 49.3%.

“While revenues have naturally declined, the company has shown an incredible ability to increase gross margins,” BMO Capital Markets analyst Simeon Siegel said in an interview. “They actually capture more with less. ”

Under Armor shares jumped about 12% in pre-market trading.

Here’s how the retailer fared in the quarter ended June 30 compared to analysts’ expectations Refinitiv has survived:

  • Loss per share: 31 cents, adjusted, compared to an expected loss of 41 cents
  • Revenue: $ 707.6 million vs. $ 543.8 million, forecast

With the reopening of stores, the company said it was “encouraged” by the momentum it was seeing in June and July.

“However, we remain sufficiently cautious about the 2020 balance due to the lingering uncertainty surrounding the dynamics of consumer purchases, the potential for a highly promotional environment and proactive decisions to reduce inventory purchases. to be more aligned with the anticipated demand related to the ongoing COVID. 19 impacts, ”CEO Patrik Frisk said in a statement.

Under Armor said its second quarter net loss extended to $ 182.9 million, or 40 cents per share, from a loss of $ 17.3 million, or 4 cents per share, a year earlier .

Excluding a restructuring charge of $ 39 million, the retailer lost 31 cents per share. This was less than what analysts of the 41-cent loss predicted, according to Refinitiv.

Revenue fell to $ 707.6 million from $ 1.19 billion a year ago. Analysts were forecasting revenue of $ 543.8 million.

As part of this, clothing sales fell 42% to $ 426 million, while footwear revenue fell 35% to $ 185 million and accessories revenue fell 47% to $ 56 million.

Under Armor said it ended the quarter with cash and cash equivalents of $ 1.1 billion.

He said inventories rose 24% to $ 1.2 billion.

Earlier this week, the Baltimore-based company said it had received notification of a possible enforcement action from the Securities and Exchange Commission regarding the accounting treatment of sales it recorded between the third quarter of 2015 and the fourth quarter of 2016.

On July 22, Under Armor, in addition to two executives – Kevin Plank, its former CEO and current executive chairman, and David Bergman, its current chief financial officer – received Wells notices relating to a previously disclosed SEC investigation, said the company in a press release. 8-K deposit.

A Wells opinion does not necessarily mean that the company or the officers have broken the law. However, this indicates that the agency is considering enforcement action. Under Armor said Monday it maintains its actions were “appropriate” and that it intends to “work towards a resolution of this matter.”

As of the market close on Thursday, Under Armor shares are down about 47% this year. The company has a market capitalization of approximately $ 5.2 billion.

Find the full press release on Under Armor results here.


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