Under Armour forecast first-quarter revenue above estimates on higher sales at full price, as a strong Asia-Pacific and online performance helped it post a surprise holiday-quarter profit on Wednesday, sending its shares up 10 per cent.
The company’s results were also buoyed by an 11 per cent jump in sales at its high-margin, direct-to-consumer units in the fourth quarter, helped by a 25 per cent growth in e-commerce sales.
Several athletic apparel makers, including Under Armour and Nike, have been looking to direct a home workout-led demand boom for their training shoes and running shorts to their own stores and away from low-margin wholesale channels.
Under Armour forecast its current-quarter revenue to jump about 20 per cent, higher than a Refinitiv IBES estimate of 17.65 per cent, on lower discounting and more full-price sales.
“In our retail stores, we are working to evolve concepts to drive more profitable formats, particularly for our full-price brand house locations,” Chief Executive Officer Patrik Frisk told analysts.
It also forecast adjusted profit per share to be about 3 cents, while analysts expect a loss of 5 cents.
Retail analysts have also said Under Armour’s move to expand its product line related to brands backed by actor Dwayne “The Rock” Johnson and NBA star Stephen Curry would boost its sales.
“UAA’s turnaround continues to pose an intriguing setup as the brand re-bases in North America to support long-term growth,” RBC Capital Markets analyst Kate Fitzsimons said.
The company’s overall revenue fell about 3 per cent to $1.40 billion in the three months ended Dec. 31, but topped estimates of $1.27 billion, as its Asia-Pacific unit posted a 26 per cent growth.
Excluding items, it posted a surprise per-share profit of 12 cents, compared with market estimates of a loss of 7 cents.
Under Armour also forecast 2021 profit in line with estimates, while it expects revenue growth percentage to be in high single-digits in 2021. Analysts estimate revenue to rise by 12.65 per cent.
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