Products are displayed in an Under Armour store in New York City, November 4, 2019.
Brendan McDermid | Reuters
Under Armour on Wednesday reported a surprise profit for the holiday quarter, with sales boosted by strong digital growth and expenses kept in check.
The retailer has been one key beneficiary during the Covid pandemic, along with Nike and Lululemon, of more consumers looking for athletic apparel to wear for at-home workouts or just around the house.
“There’s been a resurgence in terms of fitness … personal fitness, and general wellness,” CEO Patrik Frisk told analysts during a conference call. “We’re an authentic athletic performance brand.”
The athleisure apparel company also offered an initial outlook for 2021, despite the uncertainty brought on by the pandemic. It expects sales to rise in the high single digits, helped by a rebound of consumer demand in North America. Revenue fell 15% in 2020.
Its shares jumped more than 10% in early-morning trading.
Here’s how the company did for the fourth quarter compared with what analysts were expecting, based on a survey by Refinitiv:
- Earnings per share: 12 cents, adjusted vs. a loss of 7 cents expected
- Revenue: $1.4 billion vs. $1.27 billion
For the fourth quarter, net income grew to $184.5 million, or 40 cents per share, compared with a loss of $15.3 million, or 3 cents a share, a year earlier.
The company previously announced a $550 million to $600 million restructuring plan intended to help improve profits and cash flow. It recorded $62 million of pretax charges tied to this plan in the fourth quarter. Excluding one-time charges, the company earned 12 cents per share, better than the 7 cent loss forecast by analysts.
Sales dropped 3% to $1.40 billion from $1.44 billion a year earlier but topped analysts’ estimates of $1.27 billion.
Wholesale revenue fell 12%, while Under Armour’s direct-to-consumer business grew 11%, driven by a 25% jump in e-commerce sales. More shoppers visited its website to buy workout gear and other outdoor sport accessories to keep active during the pandemic.
But the company saw more weakness on its home turf, with North American sales down 6%. Revenue rose 7% in international markets.
Even though the pandemic continues to make conditions uncertain, the company released a forecast for this year, predicting a per-share loss of 18 cents to 20 cents. After adjustments, however, Under Armour expects to earn 12 cents to 14 cents a share. Analysts had been calling for adjusted per-share earnings of 13 cents, according to Refinitiv.
The company cautioned that its outlook could still be hurt by the pandemic. Although most of its stores are open, few are operating at fully capacity, it said.
For the first quarter of 2021, Under Armour is calling for sales to be up about 20% year over year.
The company also announced Wednesday that its board has authorized a change in its fiscal year-end to March 31 from Dec. 31, effective for the fiscal year beginning April 1, 2022.
Under Armour shares are up about 2% over the past 12 months, as of Tuesday’s market close. The company has a market cap of $9.42 billion.