Under Armour Inc. (UAA) - Get Report posted a surprise fourth quarter loss Tuesday, and forecast weaker 2020 sales and near-term uncertainty linked to China's coronavirus, sending shares sharply lower in pre-market trading.
Under Armour said its loss for he three months ending in December was pegged at 3 cents per share, compared to a profit of 1 cents over the same period last year and a Street consensus forecast of 10 cents per share. Group revenues, Under Armour said, were essentially flat to last year at $1.4 billion, but also missed analysts' estimates of a $1.47 billion tally.
Looking into the 2020 financial year, Under Armour said it sees revenues falling by a low single-digit rate when compared to 2019, well shy of the Refinitiv forecast of a 4.2% growth rate. Under Armour said China's coronavirus would have a $50 million to $60 million impact on first quarter sales, and forecast 2020 earnings in the region of 10 cents to 13 cents per share.
"Under Armour is an operationally better company following our transformation over the past few years, with a clearly defined and focused strategy, enhanced go-to-market process, cleaner inventories and a stronger balance sheet," said CEO Patrik Frisk. "However, ongoing demand challenges and the need to drive greater efficiencies in our business requires us to further prioritize our investments to put our company in the best position possible to achieve sustainable, profitable growth over the long-term."
Under Armour shares were marked 16.9% lower in early trading following the earnings release to change hands at $17.00 each, a move that erases all of the stock's gains over the past six months.
Under Armour also said it might scrap plans to open a flagship store in Manhattan, which had been tabbed for construction on Fifth Avenue in the old location of FAO Schwarz, a decision it said could cost as much as $250 million in pre-tax charges.
"Based on initial assessments and timing of a potential restructuring initiative, the company could realize approximately $30 million to $50 million in pre-tax benefits in 2020" Under Armour said. "The company expects to complete its assessment during the first quarter of 2020, and subject to board review and approval, would announce any potential restructuring charges upon adoption of any plan."