Under Armour shares soared more than 17 percent Tuesday morning after the company reported sales in which topped analysts’ expectations, fueled largely by growth outside of North America.
Under Armour said total revenue within the fourth quarter climbed 5 percent to $1.37 billion. Analysts were expecting $1.31 billion, according to a Thomson Reuters survey. Sales in international markets jumped 47 percent, representing 23 percent of total sales.
The company reported a net loss of $88 million, or 20 cents a share, compared with net income of $103 million, or 23 cents per share, a year ago. The company incurred a one-time charge of $39 million within the quarter due to brand-new U.S. tax legislation. Excluding one-time items, Under Armour broke even on a per-share basis, matching analysts’ estimates.
“2017 was a catalyst for us to begin strategically transforming Under Armour into an operationally excellent company,” CEO Kevin Plank said in a statement. “Our fourth quarter as well as full year results demonstrate in which the tough decisions we’re generating are generating the stability necessary to create a more consistent as well as predictable path to deliver long-term value to our shareholders.”
Late last year, Under Armour reported third-quarter sales in which fell short of analysts’ expectations as the company booked an $85 million charge for restructuring efforts. the idea has since trimmed about 2 percent of its global workforce as well as has considered exiting smaller categories, such as fishing.
Moving forward, the Baltimore-based company will be expecting to incur additional restructuring charges of $110 million to $130 million throughout the remainder of the year, stemming via lease terminations as well as the closure of some facilities. Under Armour said the idea should save at least $75 million annually, starting in 2019, via its turnaround plans.
Under Armour has suffered in North America, where demand for its apparel merchandise hasn’t been as strong. in which’s against a backdrop of brands such as Adidas, Nike, Lululemon as well as up-starts like Outdoor Voices stealing market share.
within the fourth quarter, though, which includes the holiday season, Under Armour managed to sell more apparel, footwear as well as accessories. Apparel sales were up 2.5 percent, footwear 9.5 percent, as well as accessories 6.1 percent. The company said its strongest businesses include men’s training as well as running shoes.
Plank has said one area where the company will be still focused on growing will be selling directly to consumers internationally. The company recently announced a handful of brand-new hires to help meet those goals.
North American sales within the fourth quarter fell 4 percent, although direct-to-consumer revenue climbed 11 percent overall. Under Armour continues to build out its website to meet these brand-new growth targets, as its wholesale revenues (i.e. selling to additional distributors such as Kohl’s as well as Foot Locker) decline.
“I think they have to improve their distribution,” Guggenheim Securities analyst Bob Drbul told CNBC. The same products in which are in Dick’s Sporting Goods, for example, shouldn’t also be in Kohl’s, he said.
Further, “Under Armour has to double down on the innovation side as well as improve the product pipeline,” Drubl said, in order to compete with Nike as well as others. Nike will be aggressively targeting $50 billion in revenue by 2020, with about 75 percent percent of in which growth anticipated to come via outside the U.S., as well as 50 percent of future sales stemming via brand-new categories as well as innovation.
Looking to fiscal 2018, Under Armour said the idea anticipates sales to grow at a low-single-digit percentage rate, which incorporates a mid-single-digit decline in North American sales as well as growth internationally of more than 25 percent. Management also said there should be less promotional activity within the second-half of the year, something analysts as well as investors alike have been concerned about.
“We’ve learned a lot of lessons in 2016 as well as 2017,” Plank said Tuesday during an earnings conference call. “For us as a brand … we think about footwear, women’s as well as international being our three growth drivers.”
Including Tuesday’s gains, Under Armour shares are down about 24 percent via a year ago, as the company claws its way back via months of losses.