Under Armour Shares Rise as Results Beat Estimates

Under Armour posted a wider second-quarter net loss and a drop in revenue. But the adjusted loss and revenue were better than analysts expected.
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Under Armour  (UAA) - Get Report shares jumped after the sports-apparel company reported second-quarter results that topped analysts' expectations.

The Baltimore company reported a net loss of 40 cents a share compared with a 4-cent loss in the year-earlier period. The latest adjusted loss was 31 cents.

Revenue declined 41% year over year to $708 million from $1.19 billion. Under Armour was forced to close the majority of its stores and wholesale locations for most of the quarter due to covid-19. 

Analysts surveyed by FactSet were expecting the company to report an adjusted loss of 41 cents a share on revenue of $537.3 million. 

"In navigating this environment, our team continues to respond strategically and methodically amplifying Under Armour's connection with our consumers through innovative digital activations, proactively managing our cost structure and working to harness our brand strength amid shifts in consumer behavior," Under Armour Chief Executive Patrik Frisk said in a statement. 

The company's inventory rose 24% in the quarter to $1.2 billion, due to lack of retail channels. 

Revenue declines by division included 42% in apparel and 35% in footwear. But the company's connected-fitness segment saw a 3.1% increase in revenue to $32.9 million.

Gross-profit margin widened 2.8 percentage points to 49.3%, helped by “lower sales to the off-price channel, as well as a higher mix of direct-to-consumer sales,” offset partly by covid-19-related discounting, the company said.

Selling, general and administrative expense fell 15% to $480 million, helped by factors including reduced marketing spending.

Now that the company's doors have reopened for the most part, Frisk says, consumer-shopping sentiment remains uncertain. And Under Armour faces the prospect of "a highly promotional environment" in which it marks down its products to move them. 

Under Armour shares at last check were up 10% to $12.59.