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Volume 25 No. 63


Under Armour this morning reported a "steep" loss for Q4, but the international market "helped boost the Baltimore brand’s end-of-year sales, beating analysts’ estimates," according to Lorraine Mirabella of the BALTIMORE SUN. UA "reported a net loss" of $88M for the quarter that ended Dec. 31, but sales rose 5% to $1.4B, beating the $1.3B figure "anticipated by analysts." Sales for the year rose 3% to $5B. UA Founder, Chair & CEO Kevin Plank "described last year’s challenges as a catalyst to start transforming the once-rapidly growing company, which has struggled with intense competition and growing pains while becoming known globally." The brand had "stronger sales growth in its online and branded store channels," an 11% increase, while sales to wholesale customers, which include retailers such as sporting goods stores, fell 1% (, 2/13). In Baltimore, Holden Wilen writes UA had a "rough year," as the brand saw its "sales lag and its stock price tumble" more than 45%. But footwear sales, an "important" UA segment that it "wants to grow," increased 9%. Footwear revenue for the full year was up 3% to $1B, "driven by strength in running and men's training and mitigated by basketball and youth." Accessories revenue increased 10% to $446M for the full year. Looking ahead to '18, UA "projects sales to increase at a low single-digit percentage rate, with a mid-single-digit decline in North America and international growth" of more than 25% (, 2/13). At presstime, shares of UA were trading at $16.38 per share, up 15.1% from the close of business yesterday (THE DAILY).

CLEARING THE RACKS: CNBC’s Courtney Reagan noted UA is "going to cut back its assortment with 30-40% fewer items by the fall of 2019 than what we saw in 2017, so that's a pretty big call back on inventory.” B. Riley FBR Senior Research Analyst Susan Anderson said UA "will not be able to return to double-digit growth.” Anderson said it "will be a while of clearing through that heavy inventory that will really hurt the first half" of '18. She noted the company also is “reeling in expenses, which is going to take a couple of years. Reagan also noted men’s and women’s training and running are the “areas with the largest market and those will be focuses this year" ("Squawk On the Street, CNBC, 2/13).

FUTURE WON'T BE EASY: BLOOMBERG NEWS' Sarah Halzack writes UA "must be glad to put 2017 in the rearview mirror." The company last year "failed to deliver the strong sales growth investors had come to expect." However, investors are "apparently pleased" that the quarter "wasn't quite the grim finale to the year they expected." But UA "shouldn't take a victory lap." It "botched the launch of the Curry 3 sneaker" and "struggled to manage the growing pains of rapid expansion." Halzack: "I don't see much indication 2018 will be easier." Nike has "not given Under Armour much of an opening where it badly needs one," and "neither ... has Adidas." All of that "underscores how hard it will be for Under Armour to meaningfully grow sales and take market share this year" (BLOOMBERG NEWS, 2/13). Guggenheim Securities Senior Managing Dir Bob Drbul said UA has "a lot of work ahead of them.” Drbul noted UA saw five years of “hyper growth," but now it has to "adjust to this new environment that they're operating in.” Drbul: “They have to improve their distribution. There's a lot of conflict in terms of product that they're selling into athletic specialty, that they're selling into Amazon, that they're selling into Kohl's. The segmentation of their product is probably as important … (because) the same product is in Dick's Sporting Goods that's in Kohl's and the pricing is always fiercely competitive." Drbul added UA has to "double down on the innovation side and improve their product pipeline and I think they are, but it's going to take some time” (“Squawk Box,” CNBC, 2/13).