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Under Armour (UAA) Q4 Earnings Beat Estimates, Revenues Fall Y/Y

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Under Armour, Inc. (UAA - Free Report) has reported mixed fourth-quarter fiscal 2024 results, wherein the top and bottom lines beat the Zacks Consensus Estimate. However, both metrics dropped year over year.

Revenue & Earnings Picture

The Baltimore-based company reported adjusted earnings of 11 cents a share, which beat the Zacks Consensus Estimate of 7 cents. However, the figure decreased from adjusted earnings of 18 cents a share in the year-ago period.

Meanwhile, net revenues of $1,332.2 million surpassed the Zacks Consensus Estimate of $1,323 million. This metric declined 4.7% on a year-over-year basis and 5% on a currency-neutral basis.

Wholesale revenues declined 6.5% to $849.8 million, while direct-to-consumer revenues increased 0.2% to $454.7 million. Revenues from owned and operated stores rose 7%, and eCommerce revenues dropped 8%, accounting for 43% of the total direct-to-consumer revenues for the quarter.

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 Delve Deeper

By product category, Apparel revenues edged down 1.3% year over year to $877.3 million, whereas Footwear revenues decreased 10.6% to $337.7 million. Revenues from the Accessories category fell 6.6% to $89.4 million. Meanwhile, Licensing revenues increased 10.5% to $28.5 million.

Net revenues from North America declined 10.4% year over year to $771.9 million. Meanwhile, revenues from the international business increased 6.6% (up 6% on a currency-neutral basis) to $561.1 million.

Within the international business, net revenues from the EMEA jumped 9.5% year over year to $284.1 million. Revenues from the Asia-Pacific rose 0.8% to $226.7 million and that from the Latin American region grew 20.2% to $50.2 million.

The company’s gross margin expanded 170 basis points to 45% from the prior-year period, largely propelled by supply-chain efficiencies resulting in reduced freight costs. However, this gain was partly offset by unfavorable foreign currency impacts and proactive inventory management actions, including increased promotional activities in the direct-to-consumer business segment.

Adjusted SG&A expenses declined 5% year over year to $545.7 million. Adjusted operating income came in at $53.9 million in the quarter under review.


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Other Financial Details

Under Armour ended the quarter with cash and cash equivalents of $858.7 million, a long-term debt (net of current maturities) of $594.9 million, and total stockholders' equity of $2,153.3 million. For fiscal 2025, management expects capital expenditure between $200 million and $220 million.

During the quarter, the company approved the buyback of up to $500 million of its outstanding Class C common stock. The repurchases may be conducted over the next three years using various methods, such as accelerated share repurchase, open market purchases or private negotiations.

FY25 Outlook

For fiscal 2025, Under Armour expects revenues to decrease in a low-double-digit percentage rate. This forecast includes a 15-17% decline in North America as the company aims to significantly restructure this segment after years of extensive promotional activities, especially in its direct-to-consumer sector. Additionally, a low-single-digit percentage decrease is anticipated in international revenues due to conservative consumer trends and efforts to maintain brand strength.

The gross margin is projected to increase 75-100 basis points, influenced by a substantial reduction in promotional and discount activities in the DTC business, and benefits from product costing.

Selling, general and administrative expenses are anticipated to decrease 2-4%. Operating income is expected between $50-$70 million. Excluding expected restructuring charges, the adjusted operating income is projected to be $130-$150 million. Adjusted earnings per share are estimated between 18 cents and 21 cents.

This Zacks Rank #3 (Hold) stock has declined 7.4% in the past three months compared with the industry’s fall of 1.9%.

Key Picks

Some better-ranked stocks in the same space are The Gap, Inc. (GPS - Free Report) , Skechers U.S.A., Inc. (SKX - Free Report) and Abercrombie & Fitch Co. (ANF - Free Report) .

The Gap is a premier international specialty retailer offering a diverse range of clothing, accessories and personal care products. It sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for GPS’s current fiscal-year earnings and sales indicates declines of 0.3% and 4.9%, respectively, from the year-ago reported figures. GPS has a trailing four-quarter average earnings surprise of 180.9%.

Skechers designs, develops, markets and distributes footwear for men, women and children. It currently flaunts a Zacks Rank #1.

The Zacks Consensus Estimate for Skechers’ current financial-year earnings and sales indicates growth of 15.2% and 10.3%, respectively, from the year-earlier levels. SKX has a trailing four-quarter average earnings surprise of 34.1%.

Abercrombie is a specialty retailer of premium, high-quality casual apparel. It currently has a Zacks Rank of 2 (Buy). ANF has a trailing four-quarter average earnings surprise of 715.6%.

The Zacks Consensus Estimate for Abercrombie’s current fiscal-year earnings and sales indicates growth of 20.1% and 5.9%, respectively, from the prior-year actuals.

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