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Under Armour (UAA) Q4 Earnings & Revenues Top Estimates

Under Armour, Inc. UAA delivered robust fourth-quarter fiscal 2023 results as the top and bottom lines improved year over year and beat the Zacks Consensus Estimate. However, the company provided guidance for fiscal 2024, which was lower than analyst expectations. This led to a fall of more than 6.1% in share price during pre-market session on May 9.

Nevertheless, management remains enthusiastic about collaborating with Stephanie Linnartz to take its strategic consumer and product enhancements forward with its brand strength.

Revenue & Earnings Picture

Under Armour reported adjusted earnings of 18 cents a share, which beat the Zacks Consensus Estimate of 15 cents. The figure ascended from the adjusted loss of 1 cent a share reported in the year-ago period.

Meanwhile, net revenues of $1,398.9 million came ahead of the Zacks Consensus Estimate of $1,356 million and increased 8% on a year-over-year basis. The metric grew about 10% on a currency-neutral basis.

The company’s wholesale revenues increased 10% year over year to $909 million, direct-to-consumer (DTC) revenues inched up 3% to $454 million due to a 6% increase in e-commerce revenues, which represented 46% of the total DTC business.

Under Armour, Inc. Price, Consensus and EPS Surprise

Under Armour, Inc. Price, Consensus and EPS Surprise
Under Armour, Inc. Price, Consensus and EPS Surprise

Under Armour, Inc. price-consensus-eps-surprise-chart | Under Armour, Inc. Quote

Let’s Delve Deeper

By product category, Apparel revenues edged up 1% year over year to $889 million, while Footwear revenues increased 27% to $378 million. Revenues from the Accessories category declined 1% to $96 million. Meanwhile, Licensing revenues tumbled 3.2% to $25.8 million.

Net revenues from North America increased 3% to $862 million. Meanwhile, revenues from the international business increased 16% (up 20% on a currency-neutral basis) to $526 million.

Within the international business, net revenues from the EMEA jumped 14% to $259.5 million. Revenues from the Asia-Pacific rallied 23.6% to $224.9 million, while revenues from the Latin American region declined 8.4% to $41.8 million.

The company’s gross margin shrunk 310 basis points to 43.4% from the prior-year period due to increased promotions, an unfavorable mix (associated with increased distributor and footwear revenues) and adverse foreign currency movements. Selling, general and administrative (SG&A) expenses declined 4% to $572 million.

The company’s operating income came in at $35 million. Under Armour’s operating loss came in at $46 million from the year-ago period, while the adjusted operating income was $11 million.

Other Financial Details

Under Armour ended the quarter with cash and cash equivalents of nearly $712 million, long-term debt (net of current maturities) of $674.5 million and total stockholders' equity of $1,998.4 million. The inventory jumped 44% to $1.2 billion. For fiscal 2024, management expects capital expenditures in the range of $250-$270 million.

During the quarter, UAA completed the accelerated share repurchase transactions to repurchase Class C shares. It repurchased one million shares of its Class C common stock in the said quarter. With this, the company repurchased 35 million shares for $425 million under its two-year $500-million program (which was approved in February 2022).

FY24 Guidance

For fiscal 2024, Under Armour expects revenues to be flat to slightly up. It expects gross margin to be up 25-75 basis points compared with the prior year's margin of 44.9%, driven by supply chain tailwinds related to lower freight costs, partially offset by mix impacts related to higher off-price revenues and higher promotions expected in the company's DTC business. SG&A expenses are anticipated to be flat to slightly up.

Under Armour expects the operating income between $310 million and $330 million versus the comparable baseline period’s operating income of $284 million.

Under Armour expects earnings in the band of 47-51 cents per share, down from 84 cents per share reported in fiscal 2023. The company reported adjusted earnings of 58 cents a share for the comparable baseline period.

This Zacks Rank #3 (Hold) stock has declined 18.3% in the past three months against the industry’s growth of 6.7%.

Stocks to Consider

Here we have highlighted three better-ranked stocks, namely, BJ's Wholesale Club BJ, Kimberly-Clark  KMB and Crocs CROX.

BJ's Wholesale Club, which is one of the preferred destinations for shoppers, currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for BJ’s Wholesales’ current financial year revenues and earnings per share (EPS) suggests growth of 7.3% and 0.8%, respectively, from the corresponding year-ago reported figures. BJ has a trailing four-quarter earnings surprise of 19.6%, on average.

Kimberly-Clark is engaged in the manufacture and marketing of a wide range of consumer products around the world. It currently has a Zacks Rank of 2. KMB has a trailing four-quarter earnings surprise of 5.1%, on average.

The Zacks Consensus Estimate for Kimberly-Clark’s current financial year sales and earnings suggests growth of 2.2% and 9.4%, respectively, from the year-ago reported numbers.

Crocs, one of the leading footwear brands, has a Zacks Rank of 2 at present. CROX has a trailing four-quarter earnings surprise of 19.6%, on average.

The Zacks Consensus Estimate for Crocs' current financial year sales and EPS suggests growth of 13% and 5.6%, respectively, from the year-ago corresponding figures.

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Under Armour, Inc. (UAA) : Free Stock Analysis Report

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