Under Armour(UAA) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue for fiscal 2024 decreased by 3% to $5.7 billion, primarily due to challenges in the North American market, partially offset by international growth [43][44] - Gross margin increased by 130 basis points to 46.1%, driven by supply chain benefits related to lower freight and product costs [43] - Inventory decreased by 19% to$ 958 million, approaching pre-pandemic levels [43] Business Line Data and Key Metrics Changes - North American revenue declined by 10% to $1.3 billion, attributed to softer wholesale demand and lower sales to the off-price channel [25][68] - Direct-to-consumer (DTC) business was flat, with a 7% growth in stores offset by a 7% decline in e-commerce [68] - EMEA revenue increased by 10% or 7% on a currency-neutral basis, while APAC revenue was up 1% or 5% on a currency-neutral basis [25][41] Market Data and Key Metrics Changes - The anticipated decline in North American revenue is driven by lower wholesale revenue due to retailer cautiousness amid softer consumer demand [21] - International regions are expected to see revenue down at a low single-digit rate due to conservative macro consumer trends [5][66] Company Strategy and Development Direction - The company is focusing on reconstituting its brand in North America, prioritizing men's apparel while not deprioritizing footwear or women's business [12][24] - A restructuring plan is in place to streamline operations, with expected SG&A expenses down by 2% to 4% in fiscal 2025 [6][20] - The company aims to enhance its product offerings and storytelling, emphasizing a direct-to-consumer line of exclusive products [15][28] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the need to improve brand perception and execution, particularly in North America, and emphasizes a commitment to elevating the brand [12][21] - The leadership team is focused on building a more collaborative culture and simplifying the operating model to drive efficiencies [18][19] - The company expects a low double-digit revenue decline in fiscal 2025 but is optimistic about gross margin improvement [44][72] Other Important Information - The company plans to incur total estimated pre-tax restructuring charges of approximately$ 70 million to $90 million [71] - A new three-year,$ 500 million share buyback program has been approved to enhance shareholder value [73] Q&A Session All Questions and Answers Question: What is the timeline for North America to return to growth? - Management indicated that it is not expected to happen overnight and is using an 18-month outlook for improvement [78] Question: How is the company addressing the e-commerce channel? - The company is focused on reducing promotions to create a cleaner story online and improve the alignment of product and storytelling [93] Question: What is the outlook for international markets? - Management is cautiously optimistic, leveraging past experiences to approach international growth while maintaining brand integrity [90][92]