The products are on display at an Under Armor store in New York City, November 4, 2019.
Brendan McDermid | Reuters
Under Armor said Friday that its fiscal second-quarter revenue fell 41%, but overall its results were better than the retailer expected thanks to an e-commerce boost.
The shoe maker estimated that approximately 80% of stores where you can buy your merchandise, including its own stores, closed due to the coronavirus pandemic until mid-May.
Selling directly to customers made their sales more profitable and there was less drag on items sold in off-price channels. As a result, its gross margins strengthened 280 basis points to 49.3%.
“Although revenue was understandably low, the company showed incredible ability to increase gross margins,” BMO Capital Markets analyst Simeon Siegel said in an interview. “They are effectively catching more with less.”
Under Armor’s shares increased approximately 12% in premarket trading.
Here’s how the retailer did it during the quarter ended June 30 compared to what analysts surveyed by Refinitiv expected:
- Loss per share: 31 cents, adjusted, versus a loss of 41 cents, expected
- Revenue: $ 707.6 million versus $ 543.8 million, expected
With the reopening of the stores, the company said it was “encouraged” by the momentum it was seeing in June and July.
“However, we remain cautious regarding the 2020 balance due to continued uncertainty related to consumer purchasing dynamics, the potential for a highly promotional environment and proactive decisions to reduce inventory purchases to be more aligned with the anticipated lawsuit related to COVID- 19 impacts, “Chief Executive Patrik Frisk said in a statement.
Under Armor said its second-quarter net loss widened to $ 182.9 million, or 40 cents a share, from a loss of $ 17.3 million, or 4 cents a share, a year earlier.
Excluding a $ 39 million restructuring charge, the retailer lost 31 cents a share. That was less than analysts predicted for 41-cent losses, according to Refinitiv.
Revenue fell to $ 707.6 million from $ 1.19 billion a year ago. Analysts expected revenue of $ 543.8 million.
Within that, clothing sales fell 42% to $ 426 million, while shoe revenue fell 35% to $ 185 million, and accessory revenue fell 47% to $ 56 million.
Under Armor said it ended the quarter with available cash and cash equivalents of $ 1.1 billion.
He said inventories increased 24% to $ 1.2 billion.
Earlier this week, the Baltimore-based company said it received a notice of possible enforcement action from the Securities and Exchange Commission related to the accounting treatment of sales it booked between the third quarter of 2015 and the fourth quarter. 2016.
On July 22, Under Armor, plus two executives, Kevin Plank, its former CEO and current chief executive, and David Bergman, its current CFO, received Wells’ notices related to an investigation previously revealed by the SEC, the company said. it’s a statement. File 8-K.
A Wells notice does not necessarily mean that the company or executives violated the law. However, it does indicate that the agency is considering a compliance action. Under Armor said Monday that it maintains that its actions were “appropriate” and that it intends to “work towards a resolution of this matter.”
As of Thursday’s market close, Under Armor shares fell 47% this year. The company has a market capitalization of approximately $ 5.2 billion.
Find the full Under Armor earnings press release here.
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