Under Armour (UAA) Q2 Earnings Top, Revenues Down Y/Y
Under Armour, Inc. UAA delivered better-than-expected earnings in second-quarter fiscal 2024, wherein the metric also increased year over year. Management also revised the guidance for fiscal 2024.
The company reported earnings of 24 cents a share, which beat the Zacks Consensus Estimate of earnings of 21 cents per share. The company recorded earnings of 19 cents a share in the year-ago period.
Meanwhile, net revenues of $1,566.7 million came almost in line with the consensus estimate of $1,566 million but fell 0.5% on a year-over-year basis. The metric also slipped 1% on a currency-neutral basis.
The company’s wholesale revenues dipped 1% year over year to $940 million, while direct-to-consumer (DTC) revenues inched up 3% to $596 million due to a 2% rise in e-commerce revenues, which represented 35% of the total DTC business. Growth in the e-commerce and retail channels aided the performance. The company recorded 4% growth in owned and operated store revenues.
Let’s Delve Deeper
By product category, Apparel revenues edged up 3.1% year over year to $1,070.4 million, while Footwear revenues dipped 6.6% to $351.2 million. Revenues from the Accessories category inched up 2.5% to $113.9 million. Meanwhile, Licensing revenues tumbled 13.5% to $28.6 million.
Net revenues from North America decreased 2% to $991.4 million. Meanwhile, revenues from the international business increased 5% (up 3% on a currency-neutral basis) to $573 million.
Within the international business, net revenues in EMEA jumped 9% to $287.1 million (up 4% at constant currency), 3% in Asia-Pacific to $232.1 million (up 7% at constant currency) but fell 8% in Latin America to $53.7 million (down 19% at constant currency).
The company’s gross margin expanded 260 basis points to 48% from the prior-year period owing to gains from the supply chain with respect to reduced freight expenses, partly offset by a channel mix impact associated with the normalization of off-price sales. Selling, general and administrative (SG&A) expenses rose 2% to $606 million.
The company’s operating income increased to $145.8 million from $119.4 million. The operating margin was 9.3%, up from 7.6% in the year-earlier quarter.
Other Financial Details
Under Armour ended the quarter with cash and cash equivalents of nearly $655.9 million, long-term debt (net of current maturities) of $594.7 million and total stockholders' equity of $2,089.7 million. The inventory jumped 6% to $1.1 billion.
FY24 Guidance
Management revised the view for fiscal 2024. For the current fiscal year, Under Armour expects revenues to decline 2-4% versus the earlier view of flat to slightly up. It expects the gross margin to be up 100-125 basis points from the prior year's margin of 44.9% compared with 25-75 basis points projected previously. SG&A expenses are anticipated to be flat to slightly down, versus the previous view of flat to slightly up.
Under Armour continues to expect the operating income to be between $310 million and $330 million versus the comparable baseline period’s operating income of $284 million.
UAA still envisions earnings to be in the band of 47-51 cents per share, down from 84 cents per share reported in fiscal 2023. The company reported adjusted earnings of 58 cents a share for the comparable baseline period. Capital expenditures are likely to come in the band of $230-$250 million.
This Zacks Rank #4 (Sell) company’s stock has fallen 4.5% in the past three months compared with the industry’s 1.4% drop.
Eye These Solid Picks
Some better-ranked companies are G-III Apparel Group GIII, lululemon athletica LULU and Ralph Lauren RL.
G-III Apparel sports a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
GIII has a trailing four-quarter earnings surprise of 526.6%, on average. The Zacks Consensus Estimate for GIII’s 2023 sales and earnings per share (EPS) indicates increases of 2.4% and 14.7%, respectively, from the year-ago period’s reported levels.
lululemon athletica is a yoga-inspired athletic apparel company. LULU carries a Zacks Rank #2 (Buy), at present.
The Zacks Consensus Estimate for lululemon athletica’s current financial-year sales and EPS suggests growth of 18.1% and 20.5%, respectively, from the year-ago corresponding figures. LULU has a trailing four-quarter earnings surprise of 6.8%, on average.
Ralph Lauren, a footwear and accessories dealer, has a Zacks Rank of 2 at present. RL has a trailing four-quarter earnings surprise of 17.3%, on average.
The Zacks Consensus Estimate for Ralph Lauren’s current financial-year sales and EPS suggests growth of 2.4% and 13.4%, respectively, from the year-ago corresponding figures.
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Under Armour, Inc. (UAA) : Free Stock Analysis Report
