In the last year, shares of Under Armour (UA) are down 26%. Investors are wondering whether Under Amour can get back in the game.
Almost 24% of Under Armour shares are sold short. Hedge funds torpedoed the stock after The Sports Authority filed for bankruptcy. On May 31, Under Armour cut fiscal 2016 guidance and said it would take an impairment charge of approximately $23 million related to the liquidation. Of the estimated $163 million worth of sales Under Armour expected to come from Sports Authority, management said it would only recognize $43 million of revenue, which means that Sports Authority was just 3% of Under Amour's revenue.
Under Armour cut full-year guidance by $75 million to $4.95 billion. The guidance assumes other retailers will pick up the slack from Sports Authority's bankruptcy as customers look for Under Amour at other outlets.
Even with the guidance cut, Under Armour is still expected to grow top-line revenue by 24% in fiscal 2016.
Under Armour reported second-quarter results at the end of July. Revenue rose 27.7% to $1 billion, in line with expectations. Gross margin dropped to 47.7% from 48.4%, primarily driven by a slightly less profitable sales mix. Wholesale revenue grew 27% to $635 million, while direct-to-consumer grew 28% to $321 million. International revenue, which is just 15% of total revenue, grew 68%.
Apparel was up 19% to $613 million. Footwear jumped 58% to $243 million, reflecting the continued success of the Steph Curry basketball line. Accessories increased 21% to $101 million.