Under Armour(US:UA)2020-07-31 18:23Financial Data and Key Metrics Changes - Revenue decreased by 41% to $708 million, which was better than the anticipated decline of 50% to 60% [23] - Direct-to-consumer (DTC) revenue was down 13%, while wholesale revenue declined by 58% [23] - Gross margin improved by 280 basis points to 49.3%, driven by a favorable channel mix and increased DTC sales [25] - SG&A expenses declined by 15% to $480 million due to reduced marketing spend and cost-cutting initiatives [26] - The company recorded a net loss of $183 million or $0.40 diluted loss per share [27] Business Line Data and Key Metrics Changes - Apparel revenue was down 42%, footwear down 35%, and accessories down 47% [24] - The Connected Fitness business saw a 3% increase, driven by subscription growth [25] Market Data and Key Metrics Changes - North America revenue decreased by 45%, EMEA by 39%, Asia-Pacific by 20%, and Latin America by 72% [24] - Most retail locations in North America and EMEA have reopened, while Latin America had less than 50% open by the end of June [24] Company Strategy and Development Direction - The company is focused on rebuilding the brand through increased consumer engagement and a D2C-first approach [9][17] - There is an emphasis on digital transformation and streamlining operations to enhance efficiency [14][16] - The company aims to maintain its premium brand positioning while managing inventory prudently [12][13] Management's Comments on Operating Environment and Future Outlook - The management acknowledged the significant impact of COVID-19 on business operations and consumer behavior [6][22] - There is uncertainty regarding consumer demand and shopping behaviors in the near term, with expectations of a highly promotional environment [29][30] - The company is planning for a revenue decline of 20% to 25% in the back half of the year, with a larger decline anticipated in Q4 [31] Other Important Information - The company has delivered over 5 million masks and 4 million gowns to hospitals, leveraging its expertise in PPE to create the UA SPORTSMASK for athletes [20][53] - The company ended the quarter with $1.1 billion in cash and cash equivalents, maintaining liquidity despite a significant revenue decline [33] Q&A Session Summary Question: What is the receptiveness of wholesale partners to new products given their inventory situation? - Management expressed confidence in the innovation pipeline and the ability to execute go-to-market strategies, which should instill confidence in wholesale partners [36] Question: How is the company balancing marketing spend and its impact on brand? - Management emphasized the importance of supporting athletes and adapting marketing strategies to be more effective and informed [41][45] Question: What are the plans for the off-price channel in the back half of the year? - Management indicated a cautious approach to off-price sales, expecting a more back-half weighted liquidation due to previous inventory management [58] Question: How does the company view the DTC business and its historical performance? - Management highlighted a focus on consumer centricity and improving DTC capabilities, with optimism for future growth [63] Question: What are the expectations for international profitability moving forward? - Management remains committed to international growth and profitability, viewing 2020 as an abnormal year due to COVID-19 impacts [75]