Under Armour fell short of analyst expectations on nearly every segment in the first quarter, and while founder and chief executive officer Kevin Plank sought to put a positive spin on the numbers, citing quarterly results that “met or exceeded our expectations as we drive a bold transformation,” the results proved the sports brand still has a way to go to return to its former glory, per WWD.
Wall Street wasn’t swayed by Plank’s statement, and shares fell more than 13 percent in pre-market trading.
On Friday morning before the stock market opened, the Baltimore-based company reported adjusted earnings per share of 2 cents, slightly below the analyst estimate of 3 cents, with a revenue drop of 4 percent to $1.1 billion. The net loss was $3 million and adjusted net income was $9 million.
North American sales, a sore spot for the company for a while now, also fell more than expected, with revenue down five percent to $670 million, more than the 4.4 percent analysts had projected. International sales dropped one percent to $467 million with Asia-Pacific declining 10 percent, Latin America falling 15 percent while the EMEA actually posted a 10 percent increase.
By category, apparel sales fell one percent to $747 million while footwear sales were particularly weak, dropping 14 percent to $266 million. The one highlight was accessories, which posted an 8 percent increase in sales to $100 million.
The poor showing was exacerbated by a weak second-quarter outlook with earnings per share now projected to be between 1 cent and 2 cents, significantly below analyst projection of 26 cents. Revenue is expected to decline six to seven percent, with a low-double-digit percentage decrease in North America and a low-teens percent decline in the Asia-Pacific region, partially offset by high-single-digit growth in EMEA.
“We are pleased our quarterly results met or exceeded our expectations as we drive a bold transformation —sharpening Under Armour into a brand where sports credibility, innovation and style meet operational discipline,” said Plank. “Despite ongoing uncertainty, our brand is gaining strength and we’re executing our strategic plan with clarity and confidence.”
He continued, “Moving ahead, we’re focused on strengthening our brand positioning with premium products and increasing our average selling prices through innovative offerings, optimizing our top-volume programs, and creating a more compelling full, price-to-value proposition. Regardless of the backdrop, this is about building a fearless, thoughtful and stronger Under Armour.”
Last May, Under Armour revealed a restructuring plan to improve its financial and operating efficiencies that was expected to cost from $140 million to $160 million. So far, $71 million in charges have been reported.
(This story has been updated in the headline.)
