Under Armour Inc. cut its full-year revenue forecast, citing weaker demand in its home market of North America in the second half of the fiscal year.
The athletic-goods maker sees revenue falling 2% to 4%, down from the previous view of flat to up slightly, but maintained its profit guidance of 47 cents to 51 cents a share thanks to the strength of its second-quarter earnings.
Revenue in North America fell 2% to $991 million for the quarter ended Sept. 30, even as international sales rose. Profit of 24 cents a share beat analysts’ consensus estimate of 21 cents.
Under Armour is revamping under Chief Executive Officer Stephanie Linnartz, who has indicated that 2023 is a “building year” for the brand as it resets inventory levels and realigns around new strategic priorities like womenswear and footwear.
Read More: Under Armour Gains as 2Q EPS, Apparel Sales Beat: Street Wrap
Baltimore-based Under Armour and its sportswear rivals have been working to whittle down excess merchandise with discounts over the past few quarters as they look to open up shelf space for fresh goods. Inventory rose 6% for the quarter to $1.14 billion, slightly less than analysts had estimated.
What Bloomberg Intelligence Says
“Under Armour’s better fiscal 2Q results reflect its focus on driving profitable growth, which should bode well for longer-term success. Though near-term sales may stay pressured — largely on weakness in North America and Latin America — normalizing sales to off-price and lower freight costs are bolstering margins.”
— Sydney Goodman, retail analyst
Click here to read the research.
Adidas AG, which reported earnings on Wednesday, also had problems in North America, with revenue down 9%. Nike Inc.’s sales in the region dipped 2% in its fiscal first quarter, ended in August.
Under Armour shares rose 4.2% in New York trading at 9:44 a.m. The stock was down 29% this year through Tuesday, compared with a 0.7% rise for the S&P MidCap 400 Index.
(Updates with shares in seventh paragraph.)
