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Under Armour (UAA) Beats on Q3 Earnings, Raises '21 Outlook

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Under Armour, Inc. (UAA - Free Report) continued with its stellar performance in third-quarter 2021, thanks to sturdy demand for the brand. Results reflected strength in both North America and international regions. Markedly, both the top and the bottom lines not only surpassed the Zacks Consensus Estimate but also improved year over year. This Baltimore-based company's upbeat performance highlighted improved operating model and investments across product and marketing. The stronger-than-anticipated results prompted management to raise full year view.

Under Armour reported adjusted earnings of 31 cents a share that fared far better than the Zacks Consensus Estimate of 15 cents. The bottom line also showcased an improvement from earnings of 26 cents reported in the year-ago period.

Meanwhile, net revenues of $1,545.5 million comfortably surpassed the Zacks Consensus Estimate of $1,478.7 million, thus marking the sixth straight beat. The top line grew 7.9% on a year-over-year basis. While wholesale revenues rose 10% year over year to $911 million, direct-to-consumer revenues increased 12% to $604 million buoyed by robust growth in owned and operated stores. However, this was offset by a 4% drop in e-commerce sales.

Shares of this athletic apparel maker were up during the pre-market trading session on Nov 2. We note that this Zacks Rank #3 (Hold) stock has increased 28% so far this year compared with the industry’s rally of 21.2%.

Under Armour, Inc. Price, Consensus and EPS Surprise

Under Armour, Inc. Price, Consensus and EPS Surprise

Under Armour, Inc. price-consensus-eps-surprise-chart | Under Armour, Inc. Quote

Let’s Take an Insight

By product category, Apparel revenues jumped 14.2% year over year to $1,058.2 million, while Footwear revenues increased 10.4% to $329.7 million. Revenues from Accessories category declined 12.9% to $126.3 million. Meanwhile, Licensing revenues soared 23.8% to $31.1 million.

Net revenues from North America increased 7.6% to $1,035.9 million. Revenues from international business grew 17.6% (or up 12.8% on a currency neutral basis) to $510 million. Within international business, net revenues from Asia-Pacific and EMEA increased 18.5% and 14.8% to $212 million and $241.2 million, respectively. We note that revenues from Latin America region surged 27.2% to $56.4 million.

The company’s gross margin expanded 310 basis points to 51% owing to benefits from pricing and channel mix. This was offset by the absence of MyFitnessPal platform, which carried a higher gross margin rate, and supply chain bottlenecks.

Other Financial Details

Under Armour ended the quarter with cash and cash equivalents of $1,253.7 million, long-term debt (net of current maturities) of $662.9 million and total stockholders' equity of $1,977.7 million.

2021 View

Management now anticipates full-year 2021 revenues to increase approximately 25%, up from the prior projection of low twenties percentage increase. This reflects high-twenties percentage growth rate in North America and a mid-thirties percentage growth rate in the international business.

The company now envisions adjusted earnings to reach 74 cents a share, up from previous expectation of 50-52 cents a share. The Zacks Consensus Estimate for the full year is pegged at 55 cents, which could witness upward revision in the coming days.

Under Armour anticipates full year gross margin to be up about 130 basis points when compared with the prior year adjusted gross margin of 48.6%. This reflects benefits from pricing and changes in foreign currency, partly offset by the impact of the divestment of the high gross margin business, MyFitnessPal as well as likely increase in freight costs. The company expects adjusted operating income to be approximately $475 million compared to the previous expectation of $340-$350 million.

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