After coming through a mixed holiday season, Baltimore-based Under Armour said Thursday that its sales and profit fell in the third quarter.
The sports apparel maker revised its estimates for the full year, saying revenue is expected to be down 3% to 4% instead of the previously anticipated 2% to 4% decline.
Shares of Under Armour inched up by a penny Thursday, closing at $7.71 each.
The brand has been navigating a highly promotional retail environment as demand for its footwear in the U.S. has weakened. Meanwhile, it’s working to revamp its leadership team, regain a reputation as a premium brand and make a splash in “sports-style” categories. Executives said during a conference call that the company is progressing on those fronts.
“Despite a challenging retail environment and consumer buying behavior that was inconsistent market to market, we are pleased with the results we have achieved in our third quarter,” Under Armour President and CEO Stephanie Linnartz said during a conference call. She is approaching her first year heading the brand.
Under Armour said revenue fell 6% to $1.5 billion during the three months that ended Dec. 31, in line with company expectations.
The company said its income fell nearly 8% to $114 million, or 26 cents per share, from $121.6 million, or 27 cents per share, in the third quarter of its fiscal 2023.
Adjusting for a $50 million benefit connected to the sale of Under Armour’s MyFitnessPal platform, litigation reserve expense, and related tax impacts, net income was $84 million. On that adjusted basis, the company reported earnings of 19 cents per share, beating analysts’ estimates of 11 cents per share.
Sales through retailers fell 13% to $712 million, while sales through online channels and company-owned stores were up 4% to $741 million. Much of the weakness at retail stores could be attributed to promotions across the industry, executives said.
Sales in the U.S., Under Armour’s biggest market, slid 12% to $915 million, while international sales rose 7% to $566 million, with especially strong growth in Latin America.
Apparel sales fell 6% to $1 billion, while footwear sales were down 7% to $331 million, the company reported.
Zachary Warring, an analyst at CFRA Research, maintained a “sell” rating on Under Armour’s stock, noting the company is performing below competitors Nike and Lululemon.
Under Armour shares are overvalued because of “continued underperformance versus its peers, with little light at the end of the tunnel,” Warring said in a report.
But earnings were strong despite a challenging backdrop in the U.S., said Jim Duffy, managing director of Stifel, who had a “buy” rating on Under Armour’s stock. Duffy noted in a report that Under Armour improved profit in international regions and achieved higher-than-expected profit margins and lower expenses.
“We continue to view the 12 mos. risk/reward in [Under Armour] shares as favorable,” Duffy wrote.
