Under Armour Q4 revenues rise 2 percent, maintains FY19 outlook

For its fourth quarter, Under Armour, Inc. reported 2 percent or 3 percent rise in currency neutral revenue to 1.4 billion dollars. Wholesale revenue for the quarter increased 1 percent to 737 million dollars and direct-to-consumer revenue was flat at 577 million dollars, representing 41 percent of total revenue. For the full year, the company’s revenue was up 4 percent to 5.2 billion dollars. Wholesale revenue increased 3 percent to 3.1 billion dollars and direct-to-consumer revenue was up 4 percent to 1.8 billion dollars, representing 35 percent of total revenue.

"Our 2018 results demonstrate significant progress against our multi-year transformation toward becoming an even stronger brand and more operationally excellent company," said Under Armour Chairman and CEO Kevin Plank in a statement.

Review of Under Armour’s Q4 performance

The company said, North America revenue decreased 6 percent to 965 million dollars and its international business increased 24 percent to 395 million dollars, which was up 28 percent on currency neutral basis, representing 28 percent of total revenue. Within the international business, revenue was up 32 percent or 35 percent currency neutral in in EMEA, up 35 percent or 39 percent currency neutral in Asia-Pacific, and down 15 percent or 11 percent currency neutral in Latin America.

The company added that apparel revenue increased 2 percent to 970 million dollars with growth in the train category, while footwear revenue decreased 4 percent to 235 million dollars primarily driven by lower sales to the off-price channel. Accessories revenue decreased 2 percent to 108 million dollars.

Gross margin for the quarter increased 160 basis points to 45 percent compared to the prior year, including a 2 million dollars impact related to restructuring efforts. Excluding restructuring efforts in both periods, adjusted gross margin increased 160 basis points to 45.1 percent. Operating loss was 10 million dollars, while adjusted operating income was 40 million dollars. Net income was 4 million dollars or 1cent earnings per share and adjusted net income was 42 million dollars or 9 cents adjusted earnings per share.

Highlight of Under Armour’s full year results

For the full year, revenues in North America decreased 2 percent to 3.7 billion dollars and revenues in international markets increased 23 percent to 1.3 billion dollars or rose 22 percent currency neutral, representing 26 percent of total revenue. Within the international business, the company said, revenue was up 25 percent or 23 percent currency neutral in EMEA, up 29 percent or 27 percent currency neutral in Asia-Pacific, and up 5 percent or 8 percent currency neutral in Latin America.

Full year apparel revenue increased 5 percent to 3.5 billion dollars with growth primarily driven by the train category, while footwear revenue increased 2 percent to 1.1 billion dollars driven by growth in the run category. The company added that accessories revenue was down 5 percent to 422 million dollars due to softer demand and continued actions to optimize our inventory and distribution.

Gross margin was 45.1 percent, in line with the prior year including a 21 million dollars impact related to restructuring efforts. Excluding restructuring efforts in both periods, adjusted gross margin increased 30 basis points to 45.5 percent. Operating loss was 25 million dollars, while adjusted operating income was 179 million dollars. Net loss was 46 million dollars or 10 cents loss per share and adjusted net income was 122 million dollars or 27 cents adjusted earnings per share.

Under Armour maintains previously announced outlook for FY19

Under Armour said that there are no changes to the company's 2019 outlook, which was provided at its December 12, 2018 investor day. Revenue is expected to increase approximately 3 to 4 percent reflecting relatively flat results for North America and a low double-digit percentage rate increase in the international business.

Gross margin is expected to improve approximately 60 to 80 basis points compared to 2018 adjusted gross margin due to channel mix benefits from lower planned sales to the off-price channel and a higher percentage of direct-to-consumer sales along with more favourable product costs. Operating income is expected to reach 210 million dollars to 230 million dollars and earnings per share is expected to be in the range of 31 cents to 33 cents.

Picture credit:Under Armour newsroom