Under Armour(US:UA)2022-05-06 15:23Financial Data and Key Metrics Changes - Revenue increased by 3% to $1.3 billion in the transition quarter compared to the prior year, with expectations of mid-single-digit growth impacted by supply constraints and COVID-19 [23][24] - Gross margin fell by 350 basis points year-over-year to 46.5%, primarily due to COVID-related supply chain impacts and elevated freight costs [26][27] - SG&A expenses rose by 16% to $594 million, driven by increased marketing investments and higher workforce wages [28][29] - The company reported a net loss of $60 million or $0.13 diluted loss per share, with an adjusted net loss of $3 million or $0.01 adjusted diluted loss per share [29] Business Line Data and Key Metrics Changes - Wholesale revenue increased by 4% to $829 million, driven by distributor and off-price businesses [24] - Direct-to-consumer revenue was up 1%, with eCommerce sales growing by 2% and flat results in owned and operated stores [24] - Licensing revenue surged by 23%, attributed to a timing shift in APAC and solid growth in North America [25] - Apparel revenue rose by 8%, while footwear revenue decreased by 4% due to supply constraints [26] Market Data and Key Metrics Changes - North America revenue increased by 4% to $841 million, with growth in both wholesale and DTC businesses [25] - EMEA revenue grew by 18%, driven by wholesale and DTC channels [25] - Asia Pacific revenue declined by 14% due to inbound shipping delays and retail store closures related to COVID-19 [25] - Latin America revenue decreased by 6%, impacted by a shift towards a distributor model [25] Company Strategy and Development Direction - The company is focused on profitable topline growth, emphasizing direct-to-consumer, footwear, women's, and international businesses as key growth drivers [6][21] - Five strategic platforms have been established to enhance brand growth: consumer-centricity, product engine, go-to-market platform, end-to-end planning, and omnichannel excellence [7][10] - Sustainability efforts are being amplified, including a new global headquarters and a goal of using 80% renewable energy by 2025 [19][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in long-term growth potential despite near-term headwinds from supply chain challenges and COVID-19 impacts [5][22] - The company anticipates revenue growth of 5% to 7% in fiscal 2023, with mid-single-digit growth in North America and low-teens growth internationally [31] - Management highlighted the importance of maintaining inventory discipline and the underlying demand for the brand [42][43] Other Important Information - The company has completed its 2020 restructuring plan, with no further charges anticipated [28] - A share repurchase program of $500 million has been initiated, with $300 million already executed [30] Q&A Session Summary Question: Revenue guidance for fiscal year and growth sources - Management expects mid-single-digit growth in North America, primarily driven by footwear growth outpacing apparel [38] Question: Long-term sales growth expectations - Management believes underlying demand remains strong, with temporary supply chain issues affecting current performance [40][47] Question: Order cancellations and demand-driven cancellations - No cancellations due to lack of demand were reported; all cancellations were related to supply chain issues [56] Question: Pricing strategy and regional pricing power - Pricing adjustments are being made strategically, with opportunities identified for price increases based on product categories and regional considerations [57][59] Question: Inventory units versus dollar change - Inventory units have decreased, while inventory value has increased due to rising costs [74]