Shares of sportswear maker Under Armour (UAA) plunged on Monday after the company posted a wider-than-expected first-quarter loss as the global pandemic shrunk demand for its athletic clothing and other gear, particularly in Asia, where roughly half its revenue comes from.
The Baltimore-based company posted loss of $590 million, or $1.30 a share, vs. net income of $22.5 million, or 5 cents a share, in the comparable year-ago period. On an adjusted basis, the company posted a loss of $152 million, or 34 cents a share, well below the 17-cent loss forecast by analysts polled by FactSet.
Revenue fell 23% to $930 million, though approximately 15 percentage points of the decline was due to “pandemic impacts” in the quarter, the company said. North America revenue decreased 28% to $609 million while Asia-Pacific sales fell 34%. The company had some $940 million in inventory at the end of March, an increase of 7%.
"Since mid-March, as the pandemic accelerated dramatically in North America and EMEA and retail store closures ensued, we've experienced a significant decline in revenue across all markets,” said Under Armour CEO Patrik Frisk, noting that the company was already feeling the impact from its Asia operations as far back as January.
"As a result, like so many businesses, we've had to make very difficult decisions, including temporarily laying off teammates in our U.S. retail stores and distribution centers along with other actions to ensure we protect Under Armour's financial stability."
Under Armour ended the first quarter with $959 million in cash, of which approximately $600 million was related to borrowings under the company’s revolving credit facility. It is also in the process of negotiating extended payment terms with both its customers and vendors.
Shares of Under Armour slid more than 11% to $7.92 in trading on Monday.