Under Armour(US:UA)2023-02-08 15:11Financial Data and Key Metrics Changes - Revenue for Q3 2023 increased by 3% to $1.6 billion, or up 7% on a currency-neutral basis [22][27] - Gross margin decreased by 650 basis points due to higher promotions and discounting, among other factors [29][33] - Operating income was $95 million, exceeding the outlook of $75 million to $85 million [30] - Net income was $122 million, or $0.27 diluted earnings per share, with adjusted net income at $76 million [30][35] Business Line Data and Key Metrics Changes - Apparel revenue decreased by 2%, with strengths in golf and team sports offset by softness in training [28] - Footwear revenue increased by 25%, driven by strong performance in running and team sports categories [28] - Accessories revenue declined by 2% due to weaker sales of cold weather accessories [28] Market Data and Key Metrics Changes - North America revenue declined by 2% to just over $1 billion, with wholesale down 6% and DTC up 1% [22][23] - EMEA revenue increased by 32% to $265 million, or 46% on a currency-neutral basis [23] - APAC revenue decreased by 9% to $198 million, or up 1% on a currency-neutral basis, with challenges in China impacting retail traffic [24] Company Strategy and Development Direction - The company is focusing on broadening its product offerings to address non-active moments of an athlete's day and enhancing its segmentation strategy [10][14] - A new President and CEO, Stephanie Linnartz, is expected to bring significant experience in brand strategy and digital transformation [7][8] - The company aims to strengthen its brand through innovative products and improved consumer experiences [9][10] Management's Comments on Operating Environment and Future Outlook - Management noted a dynamic retail environment with increased promotional activities due to elevated inventories across the sector [40][70] - There is cautious optimism regarding consumer behavior, with expectations that promotional pressures will continue into the next fiscal year [40][71] - The company is confident in its strategic evolution and believes it is well-positioned to navigate near-term uncertainties [36][37] Other Important Information - Inventory levels increased by 50% to $1.2 billion, reflecting a normalization to support a $6 billion brand [25][26] - The company repurchased an additional $75 million of Class C common stock, totaling $425 million under its two-year buyback program [32] Q&A Session All Questions and Answers Question: Change in the environment for the next fiscal year - Management indicated that both consumer willingness to spend and industry dynamics with heavy inventory are contributing to the changing environment [39][40] Question: Hiring of Stephanie Linnartz - Management highlighted her extensive experience and successful track record as key reasons for her appointment [41][42] Question: Expectations for stores, e-commerce, and wholesale - Management discussed strong performance in Europe and challenges in China, emphasizing the importance of DTC investments [44][45][46] Question: Marketing focus on 16-20-year-old athletes - Management noted early improvements in metrics for this demographic and plans to maintain marketing spend at 10-11% of revenue [62][65] Question: Overall consumer demand and inventory clearance - Management clarified that the current situation is more about inventory management rather than a significant decline in consumer demand [69][70]