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Under Armour (NYSE:UAA) shares were racing higher ahead of Thursday’s open as a beat on fiscal Q3 profit overshadowed a miss on sales.
“Despite a mixed retail environment during the holiday season, our Q3 revenue results were in line with our expectations; we were able to deliver better than anticipated profitability and remain on track to achieve our full-year outlook,” said CEO Stephanie Linnartz.
As a result of a 13% drop in wholesale revenue and 12% decline in sales in North America, total revenue fell 6% from the same quarter last year to $1.49B, $10M shy of what the Street estimated.
Within each segment, sales were lower across all categories with footwear losing the most traction, down 6.6% from a year ago. By channel, only direct-to-consumer showed growth from a year ago (+3.5%) versus a significant decline in wholesale sales. And similar to what was seen in other companies like GoPro (GPRO) and Skechers (SKX), sales were softest in America (-12%), compared to gains in EMEA (+7.1%), APAC (+7.1%), and LatAm (+9.4%).
The Baltimore-based retailer’s adjusted profit increased to $0.19 per share from $0.16 in Q3 2023, 8 cents above expectations. Driven by lower freight expenses and increased promotional activities in the direct-to-consumer business, gross margin increased by 100 basis points to 45.2%.
For 2024, Under Armour (UAA) anticipates a 3-4% decline in revenue versus the prior forecast for a 2-4% decline while gross margin is expected to be up 120 basis points versus the prior forecast of +100-125 basis points. CapEx for 2024 has been lowered to $210M-$230M from the prior estimate of $230M-$250M.
Adjusted net income is expected to be between $0.50 and $0.52 per share versus the Street estimate of $0.49 per share.
UAA was 6% higher in premarket trade.