Core Viewpoint - Under Armour is undergoing a significant transformation under the leadership of Kevin Plank, focusing on brand repositioning, product innovation, and market expansion, particularly in China, to enhance its competitive edge in the sports apparel industry [4][10][21]. Group 1: Company Overview - Under Armour was founded by Kevin Plank, who initially promoted the brand within his network of athletes, leading to organic growth through word-of-mouth [4]. - The company has achieved a revenue of $5.7 billion in FY2024, despite a 3% decline year-over-year, indicating a recovery to pre-transformation levels [5]. - Under Armour is one of the four global companies capable of producing a wide range of sports equipment and accessories, making it the youngest among them [6]. Group 2: Brand Strategy and Innovation - Kevin Plank emphasizes the importance of innovation and has introduced significant changes, including reducing inventory units by 25% and streamlining fabric choices, which has improved gross margins [8][10]. - The company is focusing on a new brand positioning called "Being an Underdog," which aims to resonate with consumers who identify with the challenges of not being the biggest or fastest [16][18]. - Under Armour plans to invest $500 million to promote this "Underdog" brand spirit, targeting young and promising athletes [17]. Group 3: Market Expansion and China Strategy - Under Armour's penetration in the Asia-Pacific market is only 2%, with China contributing about half of this, indicating significant growth potential [22]. - The company aims for "measured growth" in China, focusing on high-quality experience stores and e-commerce strategies to cater to the demand for premium sports products [22]. - The opening of the first flagship store in Shanghai has led to a threefold increase in sales for the CURRY brand in China, showcasing the effectiveness of localized marketing strategies [23]. Group 4: Consumer Engagement and Product Development - Under Armour is compressing its product launch cycle from 18 months to 9 months to respond more quickly to market changes and consumer needs [12]. - The company is also focusing on creating products that combine functionality, comfort, and style, appealing to a broader audience [19]. - A dedicated design center in Shanghai will help the company better understand the needs of young Chinese consumers, with local designs accounting for 20-25% of the product offerings [24].

Valuation and Market Performance - Under Armour, Inc. (UAA) is currently trading at a low price-to-sales (P/S) multiple of 0.60X, significantly below the industry average of 2.22X and the sector average of 1.84X [1][3] - In the past month, UAA stock has declined by 14.2%, compared to a 5.2% decline in the industry, contributing to its undervaluation and making it appealing for investors [4] Strategic Transformation and Loyalty Program - Under Armour has transformed its direct-to-consumer (DTC) business by focusing on full-price sales and reducing promotions, which has improved average unit retail and order values [6] - The company's loyalty program has added 4 million new members in Q3 of fiscal 2025, bringing the total to 17 million in North America, enhancing repurchase rates and brand engagement [7] Gross Margin Improvement - Under Armour achieved a 240-basis-point improvement in gross margin, reaching 47.5%, driven by reduced discounting, lower product and freight costs, and favorable currency fluctuations [9] - The company has revised its full-year gross margin outlook upward by 160 basis points, indicating strong pricing power and brand resilience [11] Marketing Strategy and International Expansion - Under Armour's marketing strategy has evolved to focus on grassroots programs and influencer collaborations, with a $500-million marketing budget aimed at engaging young athletes [12] - The company is refining its international strategies, particularly in EMEA and Asia-Pacific, to drive long-term growth and stabilize its market presence [13] Financial Outlook - Under Armour has adjusted its fiscal 2025 guidance, projecting a low-single-digit percentage decrease in adjusted selling, general and administrative expenses and an increase in adjusted operating income to between $185 million and $195 million [14][15] - The adjusted earnings per share forecast has been raised to a range of 28-30 cents, reflecting the company's commitment to cost discipline and operational efficiency [15] Analyst Sentiment - Analysts have positively revised their earnings estimates for Under Armour, with the consensus estimate for the current fiscal year increased to 30 cents per share [16]

Core Insights - Under Armour, Inc. reported third-quarter fiscal 2025 results with revenues and earnings exceeding the Zacks Consensus Estimate, although both metrics decreased year over year [1][3] - The company has refined its brand focus and updated its product strategy, which has positively impacted performance and led to an improved fiscal 2025 outlook [1] Financial Performance - Adjusted earnings were 8 cents per share, surpassing the Zacks Consensus Estimate of 3 cents, but down from 19 cents in the prior year [3] - Net revenues reached $1,401 million, exceeding the consensus estimate of $1,338 million, but decreased by 5.7% year over year [3] - Wholesale revenues fell 1% to $704.8 million, while direct-to-consumer revenues declined 9.1% to $672.9 million [4] Revenue Breakdown - Apparel revenues decreased 5% to $966.1 million, exceeding the consensus estimate of $909.2 million [5] - Footwear revenues dropped 9% to $301.2 million, below the consensus estimate of $303.6 million [5] - Revenues from Accessories rose 5.7% to $110.4 million, outperforming the consensus estimate of $98 million [5] Geographic Performance - North America revenues declined 7.8% to $843.6 million, exceeding the Zacks Consensus Estimate of $790.7 million [6] - International revenues decreased 1.4% to $558 million, with EMEA revenues increasing 4.9% to $297.9 million [7][6] Margin and Expenses - Gross profit was $665.2 million, down 0.8% year over year, but gross margin expanded 240 basis points to 47.5% [8] - Adjusted selling, general, and administrative expenses rose 5% to $605.5 million, primarily due to higher marketing expenses [9] Financial Position - The company ended the quarter with cash and cash equivalents of $726.9 million and long-term debt of $595.2 million [10] - Under Armour repurchased $25 million worth of its class C common stock, retiring 2.8 million shares [11] Fiscal 2025 Outlook - Revenues are expected to decline 10%, an improvement from the previous forecast of a low-double-digit percentage decline [14] - Adjusted operating income is projected between $185 million and $195 million, an increase from the earlier estimate [17] - Loss per share is expected between 48 cents and 50 cents, with adjusted earnings per share forecasted between 28 cents and 30 cents [18]

Revenue Performance - Total net revenues decreased by 5.7% compared to the same period last year[175] - Wholesale revenue decreased by 1.0%, while direct-to-consumer revenue decreased by 9.1%[175] - Apparel revenue decreased by 5.0%, footwear revenue decreased by 9.0%, and accessories revenue increased by 5.7%[175] - Net revenues decreased by $85.0 million, or 5.7%, to $1,401.0 million for the three months ended December 31, 2024, compared to $1,486.0 million for the same period in 2023[183] - For the nine months ended December 31, 2024, net revenues decreased by $385.9 million, or 8.8%, to $3,983.7 million compared to $4,369.7 million in the same period in 2023[183] - Total net revenues decreased by $385.96 million, or 8.8%, to $3,983.73 million for the nine months ended December 31, 2024, compared to $4,369.68 million in 2023[217] - The decrease in net sales was attributed to both wholesale and direct-to-consumer channels[185] - North America net revenue decreased by 7.8%, while EMEA increased by 4.9%[175] - North America net revenues decreased by $71.7 million, or 7.8%, to $843.6 million, attributed to declines in both direct-to-consumer and licensing revenues[215] - EMEA region net revenues increased by $13.8 million, or 4.9%, to $297.9 million, supported by growth in both wholesale and direct-to-consumer channels[215] - Asia-Pacific net revenues decreased by $55.71 million, or 8.6%, to $590.61 million, impacted by lower sales in both wholesale and direct-to-consumer channels[220] Financial Metrics - Gross margin increased by 240 basis points to 47.5%[175] - Gross profit decreased by $5.5 million to $665.2 million during the three months ended December 31, 2024, with a gross margin increase to 47.5% from 45.1%[190] - Gross profit for the nine months ended December 31, 2024, decreased by $106.7 million to $1,924.0 million, with a gross margin increase to 48.3% from 46.5%[191] - Total operating income decreased by $57.9 million, or 81.1%, to $13.5 million for the three months ended December 31, 2024, compared to the same period in 2023[216] - Other expense, net increased by $50.5 million to $2.6 million during the three months ended December 31, 2024, primarily due to an earn-out related to the sale of MyFitnessPal[206] - Income tax expense decreased by $2.3 million to $6.3 million for the three months ended December 31, 2024, with an effective tax rate of 83.3% compared to 7.2% in the prior year[208] Expenses and Costs - Selling, general and administrative expenses increased by 6.4%[175] - Selling, general and administrative expenses increased by $38.5 million, or 6.4%, to $637.7 million for the three months ended December 31, 2024, as a percentage of net revenues increased to 45.5% from 40.3%[194][197] - Selling, general and administrative expenses increased by $197.5 million, or 11.0%, during the nine months ended December 31, 2024, with a percentage of net revenues rising to 50.1% from 41.1%[197] - License revenues decreased by $5.2 million, or 17.8%, to $23.9 million during the three months ended December 31, 2024, primarily due to lower revenues from licensing partners in North America[186] - Marketing costs decreased by $31.1 million, or 7.1%, but as a percentage of net revenues, they increased to 10.2% from 10.0%[202] - Other costs increased by $228.6 million, or 16.8%, primarily due to higher litigation expenses and an impairment charge of $28.4 million[202] - Interest expense, net increased by $3.2 million to $3.4 million during the three months ended December 31, 2024, primarily due to a decrease in interest income[203] Restructuring and Future Plans - The 2025 restructuring plan was approved with an estimated total cost of $140 million to $160 million[176] - Total costs recorded in restructuring charges for the three months ended December 31, 2024, amounted to $17.764 million[176] - Up to $75 million in cash-related charges are anticipated as part of the restructuring plan, including $30 million in employee severance costs[179] - Restructuring charges increased by $13.9 million, or 100.0%, to $13.9 million for the three months ended December 31, 2024, compared to the same period in 2023, primarily due to employee-related, facility-related, and other restructuring charges[199] - The company expects trends in gross margin improvements to continue through the remainder of Fiscal 2025, albeit to a lesser extent[192] Cash Flow and Capital Expenditures - Net cash provided by operating activities decreased by $334.0 million to $142.9 million for the nine months ended December 31, 2024, compared to $476.9 million in 2023[233] - Cash flows used in investing activities increased by $27.7 million to $(99.2) million, primarily due to higher capital expenditures and acquisitions[235] - Total capital expenditures for the nine months ended December 31, 2024, were $139.9 million, representing approximately 4% of net revenues, an increase of $23.3 million from $116.5 million in 2023[236] - Cash flows used in financing activities increased by $79.5 million to $(154.5) million, including $80.9 million for repaying Convertible Senior Notes and $65.0 million for share repurchases[237] Liquidity and Financing - As of December 31, 2024, the company had approximately $726.9 million in cash and cash equivalents, sufficient to meet liquidity needs for at least the next twelve months[224] - The company authorized a share repurchase program of up to $500 million, with $65 million already repurchased as of December 31, 2024[229][232] - The company plans to continue reinvesting its non-U.S. subsidiaries' cumulative undistributed earnings of $1.5 billion to fund international growth and operations[226] - The company has a revolving credit facility of $1.1 billion, with no amounts outstanding as of December 31, 2024[238] - As of December 31, 2024, $45.9 million of letters of credit were outstanding under the amended credit agreement[240] - The company repaid $80.9 million of Convertible Senior Notes upon maturity on June 1, 2024, using cash on hand[246] - The company issued $600.0 million of 3.25% senior unsecured notes due June 15, 2026, with interest payable semi-annually[247] - The amended credit agreement requires maintaining a consolidated EBITDA to consolidated interest expense ratio of not less than 3.50 to 1.0[243] - The company incurred capital expenditures of $88.5 million related to the construction of its new global headquarters, designed with sustainability features[236]

Financial Data and Key Metrics Changes - The third quarter revenue declined by 6% to $1.4 billion, which was better than the previously expected decline of approximately 10% [50] - Gross margin increased by 240 basis points year-over-year to 47.5%, driven by supply chain benefits and reduced discounting [55][56] - Adjusted diluted earnings per share was $0.08 for the quarter, while reported diluted earnings per share broke even [60] Business Line Data and Key Metrics Changes - Direct-to-consumer revenue declined by 9%, primarily due to a 20% decrease in eCommerce sales [53] - Apparel revenue was down 5%, while footwear declined by 9%, and accessories revenue increased by 6% [54] - The company is focusing on reducing SKUs across all assortments by 25% to enhance product presentation [19] Market Data and Key Metrics Changes - North America experienced an 8% revenue decline, mainly due to lower eCommerce sales [51] - EMEA revenue increased by 5%, while APAC revenue fell by 5% [51] - Latin America saw a revenue decline of 16%, primarily due to lower distributor sales [52] Company Strategy and Development Direction - The company is transitioning to a consumer-focused category management model to enhance accountability and performance [20][22] - A new marketing strategy aims to connect more authentically with young athletes, moving away from traditional performance marketing [24][35] - The company plans to centralize its marketing budget to fuel brand activation and improve engagement with athletes [34] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the brand's repositioning and the potential for improved growth trajectories in the long term [46][68] - The company is addressing challenges in the APAC region and is focused on stabilizing its trajectory there [44][93] - Management acknowledged that while the fourth quarter may face headwinds, there are signs of improvement in profitability and brand strength [66][67] Other Important Information - The company has gained 4 million new loyalty program members, raising the total to 17 million in North America [40] - A significant portion of the marketing budget will be redeployed to enhance brand activation and storytelling [34][105] - The company is committed to maintaining its premium positioning in the market while navigating competitive pressures [42] Q&A Session Questions and Answers Question: Can you elaborate on balancing storytelling while achieving more by doing less? - The company is focusing on a growth by constraint model, empowering teams to be agile and intentional in their product offerings [75] Question: What percentage of eCommerce is still on discounts? - The company has made progress in reducing discounts but still has work to do in this area [78] Question: Are you beginning to see results from brand strengthening strategies? - Management noted increased interest from retail partners and a growing sense of energy within the company [86] Question: What is the outlook for North America? - The company is optimistic about its position in North America and is focused on reducing promotions to unlock growth [98] Question: How is the North America reset working? - Management believes they are in a better position than in years past and are working towards growth [99]

Core Insights - Under Armour reported $1.4 billion in revenue for the quarter ended December 2024, reflecting a year-over-year decline of 5.7% and an EPS of $0.08 compared to $0.19 a year ago, with a revenue surprise of +4.73% over the Zacks Consensus Estimate of $1.34 billion and an EPS surprise of +166.67% over the consensus estimate of $0.03 [1] Revenue Performance - Total revenue from North America was $843.62 million, exceeding the average estimate of $790.73 million, but representing a -7.8% change year-over-year [4] - Asia-Pacific revenues were $201.11 million, surpassing the average estimate of $195.51 million, with a year-over-year decline of -5.1% [4] - EMEA revenues reached $297.89 million, above the average estimate of $289.50 million, showing a +4.9% year-over-year increase [4] - Latin America revenues were $58.99 million, below the average estimate of $68.39 million, reflecting a -15.5% year-over-year change [4] Product Revenue Breakdown - Apparel revenues totaled $966.07 million, exceeding the average estimate of $909.22 million, with a year-over-year decline of -5% [4] - Footwear revenues were $301.21 million, slightly below the average estimate of $303.58 million, showing a -9% year-over-year change [4] - License revenues were $23.90 million, significantly below the average estimate of $45.29 million, with a year-over-year decline of -17.8% [4] - Accessories revenues reached $110.43 million, surpassing the average estimate of $97.97 million, reflecting a +5.7% year-over-year increase [4] Distribution Channel Performance - Wholesale revenues were $704.76 million, exceeding the average estimate of $631.75 million, with a -1% year-over-year change [4] - Direct to Consumer revenues were $672.95 million, slightly below the average estimate of $681.15 million, showing a -9.1% year-over-year decline [4] Stock Performance - Under Armour shares returned +1.9% over the past month, compared to the Zacks S&P 500 composite's +2.1% change, with a current Zacks Rank of 3 (Hold), indicating potential performance in line with the broader market [3]

Core Insights - Under Armour's shares increased by 5% following the release of its third-quarter sales and adjusted profit, which exceeded estimates [1][5] - The company reported third-quarter revenue of $1.40 billion, a 6% decline year-over-year, but above the Visible Alpha estimate of $1.34 billion [1] - Net income for the quarter was $1.2 million, falling short of the consensus estimate of $2.1 million [1] Financial Performance - Under Armour's adjusted profit was $0.08 per share, which was double the expectations after accounting for restructuring costs [2] - The company has revised its fiscal 2025 outlook, now expecting a per-share loss of $0.48 to $0.50, narrowed from a previous range of $0.48 to $0.51 [3] - Adjusted EPS is projected to be between $0.28 and $0.30, an increase from the prior estimate of $0.24 to $0.27 [3] - Revenue is anticipated to decline by about 10% year-over-year, an improvement from the earlier expectation of a low-double-digit percentage drop [3] Analyst Expectations - Prior to the earnings report, analysts had forecasted a full-year loss of $0.29 per share, adjusted EPS of $0.29, and a revenue decline of 10.6% [4]

Core Insights - Under Armour reported quarterly earnings of $0.08 per share, exceeding the Zacks Consensus Estimate of $0.03 per share, but down from $0.19 per share a year ago, representing an earnings surprise of 166.67% [1] - The company achieved revenues of $1.4 billion for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 4.73%, although this is a decrease from $1.49 billion in the same quarter last year [2] - Under Armour has consistently surpassed consensus EPS and revenue estimates over the last four quarters [2] Earnings Outlook - The sustainability of Under Armour's stock price movement will largely depend on management's commentary during the earnings call [3] - The current consensus EPS estimate for the upcoming quarter is -$0.07 on revenues of $1.17 billion, and for the current fiscal year, it is $0.27 on revenues of $5.09 billion [7] Industry Context - The Textile - Apparel industry, to which Under Armour belongs, is currently ranked in the top 32% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Revenue Performance - Revenue for Q3 Fiscal 2025 decreased by 6% to $1.4 billion, with North America revenue down 8% to $844 million and international revenue down 1% to $558 million[3]. - The company expects a revenue decline of approximately 10% for Fiscal 2025, with a projected 12-13% decline in North America[7]. - Net revenues for the three months ended December 31, 2024, were $1,401,039, a decrease of 5.7% compared to $1,486,043 in the same period of 2023[20]. - North America segment revenues decreased by 7.8% to $843,620 for the three months ended December 31, 2024, compared to $915,335 in 2023[20]. - Total net revenue for the nine months ended December 31, 2024, declined by 8.8% on a GAAP basis, with currency-neutral net revenue growth also declining by 8.7%[33]. - North America experienced a net revenue decline of 11.6% on a GAAP basis, with currency-neutral net revenue growth declining by 11.5%[33]. Profitability Metrics - Gross margin increased by 240 basis points to 47.5%, attributed to reduced direct-to-consumer discounting and lower product and freight costs[3]. - Operating income was reported at $14 million, with adjusted operating income at $60 million after excluding certain charges[3]. - Net income for the quarter was $1 million, while adjusted net income stood at $35 million[3]. - Gross profit for the three months ended December 31, 2024, was $665,155, representing 47.5% of net revenues, compared to $670,639 or 45.1% in 2023[20]. - The company reported a net income of $1,234 for the three months ended December 31, 2024, compared to a net income of $110,753 in 2023[20]. - Adjusted net income for the nine months ended December 31, 2024, was $169.77 million, compared to a GAAP net loss of $133.81 million[41]. Expenses and Costs - Selling, general, and administrative expenses rose by 6% to $638 million, primarily due to increased marketing investments[3]. - Selling, general and administrative expenses increased to $637,701, accounting for 45.5% of net revenues, up from 40.3% in the prior year[20]. Future Projections - Gross margin is anticipated to improve by approximately 160 basis points, driven by reduced discounting and lower costs[7]. - Operating loss for Fiscal 2025 is expected to be between $179 million and $189 million, with adjusted operating income projected at $185 million to $195 million[7]. - The company plans for a GAAP loss from operations in the fiscal year ending March 31, 2025, estimated between $179 million and $189 million[47]. - The adjusted diluted earnings per share for the fiscal year ending March 31, 2025, is projected to be between $0.28 and $0.30[48]. Cash Flow and Financial Position - The company's cash flows from operating activities generated $142.88 million, a decrease from $476.86 million in the prior year[30]. - Cash and cash equivalents decreased to $726,877 as of December 31, 2024, from $858,691 as of March 31, 2024[28]. - Under Armour's cash and cash equivalents decreased to $745.17 million from $1,057.22 million year-over-year[30]. - Total liabilities as of December 31, 2024, were $2,646,242, compared to $2,607,448 as of March 31, 2024[28]. Inventory and Receivables - Inventories increased to $1,100,530 as of December 31, 2024, compared to $958,495 as of March 31, 2024[28]. - The company reported a significant increase in accounts receivable, totaling $136.66 million, compared to $58.04 million in the previous year[30]. Shareholder Actions - Under Armour repurchased $25 million of Class C common stock, retiring 2.8 million shares as part of a $500 million share buyback program[4]. Direct-to-Consumer and Licensing Revenue - The company experienced a decline in direct-to-consumer revenues by 9.1% to $672,948 for the three months ended December 31, 2024[22]. - Licensing revenues decreased by 17.8% to $23,904 for the three months ended December 31, 2024, compared to $29,069 in 2023[22]. Store Count - Under Armour's total company-owned and operated doors decreased from 440 in December 2023 to 448 in December 2024, with North America total doors decreasing from 200 to 196[50].

BALTIMORE, Feb. 6, 2025 /PRNewswire/ -- Under Armour, Inc. (NYSE: UAA, UA) announced its unaudited financial results for the third quarter of the fiscal year 2025, which ended on December 31, 2024. The company reports its financial performance in accordance with accounting principles generally accepted in the United States ("GAAP"). This press release includes references to "currency neutral" and "adjusted" amounts, which are non-GAAP financial measures detailed in the "Non-GAAP Financial Information" secti ...