After beating quarterly profit and sales estimates in Q3, Under Armour's turnaround may "finally be taking hold after the company was surrounded by muted sentiment for quite some time," according to Brett Hershman of YAHOO FINANCE. UA saw its "biggest share gain in 10 years." North American sales are "still struggling." But Cowen & Co. Managing Dir John Kernan said that its "margin profile in North America is improving." Kernan added that UA will focus on "storytelling around emerging franchises entering the holiday season" and '19, which should "create improved brand heat" (FINANCE.YAHOO.com, 10/30). Stifel Managing Dir Jim Duffy said that UA has "reined in selling and administrative expenses and made strides in reducing excess inventory, boosting profit margins sooner than expected." Duffy: "We are encouraged by evidence of progress in Under Armour’s turnaround and our thesis for margin improvement is emboldened. We see shares offering a favorable risk/reward (and) believe consensus views are decidedly too bearish." In Baltimore, Lorraine Mirabella notes other analysts had "offered mixed reviews on the company’s efforts to restructure, raising concerns that a lack of innovative products, along with heavy discounting, could erode the brand’s appeal" (BALTIMORE SUN, 10/31). CNBC's Sara Eisen said it is a "healthier financial picture" for UA, but Q3 sales were "underwhelming" ("Power Lunch," CNBC, 10/30). The WALL STREET JOURNAL's Elizabeth Winkler writes UA's "rapid international growth is exciting" and suggests the company is "doing something right as it competes with Nike, Adidas and Lululemon in overseas markets" (WALL STREET JOURNAL, 10/31).
NOT SO FAST: In Baltimore, Holden Wilen noted UA Founder, Chair & CEO Kevin Plank "was not ready to declare victory" yesterday. It is "no secret that the last two years have been difficult" for UA. President & COO Patrik Frisk came on board last year and has been "working hand-in-hand with Plank on a 'transformation'" of UA that has included "employee turnover, layoffs, new systems and other changes aimed at making the company operate more efficiently." Wall Street finally "started buying in" after UA's Q3 report. Despite the progress, Plank said UA still has "a lot of work to do." He added, "If we can do this sort of restoration of filling and really making strong this team and this operating structure, I think we're really going to be something to deal with in about another 12 months or so" (BIZJOURNALS.com, 10/30). CNBC contributor Stephanie Link said, "I do like what I'm seeing in terms of the management" ("Fast Money Halftime Report," CNBC, 10/30).
