Under Armour Q1 Profit Falls 71%; Lower Earnings Expected
Under Armour (UA) yesterday reported a Q1 profit of $2.9M, or $0.06 per share, down 71% from $9.9M and $0.20 per share in the year-ago period, according to Andrea Walker of the Baltimore SUN. UA's Q1 revenue increased 27% to $157.3M, compared to $124.3M in the previous year. UA said that it expected year-end income from operations of $103.5-104.5M, down from its previous estimate of $108.5-110.5M. The company "blamed the expected declines on a strategy it is implementing to move more apparel through its outlet stores," as it will "cut prices and open nine additional outlet stores this year, up from the five it had initially planned to open." UA added that it "expects leftover inventory because its retail partners bought less than it had anticipated." Credit Suisse analyst Omar Saad: "We are encouraged that management decided to move aggressively to work down inventories, which is a major overhang on the stock. In our view, the company got caught ramping up inventories to meet high demand heading into a major consumer recession" (Baltimore SUN, 4/30). In DC, Anita Huslin writes UA "tempered some financial projections for the year because it expected to have to sell excess inventory at discounts and because it is boosting its marketing budget, in part to promote" this week's launch of its new cross-trainer. Morningstar analyst Brady Lemos noted that UA also reported a decline in Q1 operating margins (WASHINGTON POST, 4/30). At presstime, shares of Under Armour were trading at $35.15, up 1.53% from yesterday's close of $34.62 (THE DAILY).
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