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In spite of a challenging backdrop, Under Armour, Inc. UAA continued with its stellar performance in second-quarter 2021. Results reflected strength in both North America and international regions. Markedly, both the top and the bottom lines not only surpassed the Zacks Consensus Estimate but also improved year over year. This Baltimore-based company's upbeat performance highlighted its improved operating model and investments across product and marketing. The stronger-than-anticipated results prompted management to raise full year view.
Under Armour reported adjusted earnings of 24 cents a share that fared far better than the Zacks Consensus Estimate of 6 cents. The bottom line also showcased a sharp improvement from a loss of 31 cents reported in the year-ago period.
Meanwhile, net revenues of $1,351.5 million comfortably surpassed the Zacks Consensus Estimate of $1,218 million, thus marking the fifth straight beat. The top line surged 91% on a year-over-year basis. While wholesale revenues rose 157% year over year to $768 million, direct-to-consumer revenues increased 52% to $561 million buoyed by robust growth in owned and operated stores. However, this was offset by an 18% drop in e-commerce sales
Shares of Under Armour were up during the pre-market trading session on Aug 3. We note that shares of this Zacks Rank #3 (Hold) company have increased 22.9% compared with the industry’s rally of 13.9% in the past three months.
Under Armour, Inc. Price, Consensus and EPS Surprise
Under Armour, Inc. price-consensus-eps-surprise-chart | Under Armour, Inc. Quote
Let’s Take an Insight
By product category, Apparel revenues jumped 105.3% year over year to $874.2 million, while Footwear revenues increased 85.1% to $342.6 million. Revenues from Accessories category surged 98.7% to $111.5 million. Meanwhile, Licensing revenues soared 275.9% to $23.3 million.
Net revenues from North America increased 101.4% to $905.5 million. Revenues from international business grew 99.6% (or up 84.1% on a currency neutral basis) to $446 million. Within international business, net revenues from Asia-Pacific and EMEA increased 56.1% and 132.5% to $192.4 million and $207.2 million, respectively. We note that revenues from Latin America region surged 317.3% to $46.5 million.
The company’s gross margin expanded 20 basis points to 49.5% owing to benefits from pricing and changes in foreign currency. This was offset by channel mix and the sale of the MyFitnessPal platform, which carried a higher gross margin rate.
Other Financial Details
Under Armour ended the quarter with cash and cash equivalents of $1,349.8 million, long-term debt (net of current maturities) of $804.6 million and total stockholders' equity of $1,846.7 million.
Management now anticipates full-year 2021 revenues to increase at a low twenties percentage rate, up from the prior projection of high-teens percentage rate increase. This reflects a low twenties percentage growth rate in North America and a mid-thirties percentage growth rate in the international business.
The company now envisions adjusted earnings in the band of 50-52 cents a share, up from previous expectation of 28-30 cents a share. The Zacks Consensus Estimate for the full year is pegged at 32 cents.
Under Armour anticipates full year gross margin to be up about 50 to 70 basis points when compared with the prior year adjusted gross margin of 48.6%. This reflects benefits from pricing and changes in foreign currency, offset by the impact of the divestment of the high gross margin business, MyFitnessPal as well as likely increase in freight costs. The company guided adjusted operating income between $340 million and $350 million compared to the previous expectation of $230-$240 million.
For the third quarter, management envisions adjusted operating income in the band of $95-$105 million and adjusted earnings per share in the bracket of 13-15 cents.
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