Under Armor on Tuesday raised its full-year sales and earnings outlook as the sportswear maker sees demand for its brand return and buyers return to its stores.
The company posted revenue growth of 35% in the first quarter, exceeding analysts’ expectations. A year earlier, the company had gone through a period of temporarily closing its stores, and Under Armor had to turn to layoffs and other cost-cutting measures to deal with the health crisis.
“On a two-year stack beyond 2020, we are running a better, higher quality and more profitable business,” said CEO Patrik Frisk during a conference call on the results.
Under Armor’s stock recently fell around 3.5% after rising more than 3% in premarket trading.
Here’s how the company performed in its quarter ended March 31, compared to analyst expectations based on a refinitive survey:
- Earnings per share: 16 cents adjusted compared to 3 cents expected
- Revenue: $ 1.26 billion versus $ 1.13 billion expected
Under Armor’s net income rose to $ 77.8 million, or 17 cents per share, compared to a loss of $ 589.7 million, or $ 1.30 per share, last year.
With no one-off costs, the company earned 16 cents per share, better than the 3 cents that analysts estimated from Refinitiv to be expected.
Revenue rose to $ 1.26 billion from $ 930.2 million a year ago, beating estimates of $ 1.13 billion.
In North America, sales rose 32% while Under Armour’s smaller international division grew 58%, driven by the recovery in markets like China.
Online sales grew 69% across the company.
According to Frisk, the company sees strong demand for the brand as business rebounds in Asia and North America. In the same period last year, Under Armor’s sales fell more than 20% as its business was hit by the coronavirus pandemic and stores closed, freezing turnaround efforts.
The company has also worked to manage its inventory levels and reduce reliance on discounts to get rid of obsolete goods. Frisk said these efforts are paying off and helping to grow profits.
BMO Capital Markets analyst Simeon Siegel said he expected Under Armor’s demand to benefit from “the current trifecta of stimuli, vaccines and light industry inventory”.
“We believe that margin growth is very real and sustainable,” Siegel said in a statement to customers on Tuesday.
In its second quarter, Under Armor said sales should increase 70%, led by strongest growth in North America and Latin America as the company completes more pandemic closings in 2020.
The company anticipates restructuring costs of $ 35 million to $ 40 million in the quarter.
With these improved trends, Under Armor increased its forecast for the year. Full year sales are now expected to increase by a large percentage of teenagers compared to previous projections of a high single digit increase. According to a refinitive survey, analysts had aimed for growth of 10.1%.
Adjusted earnings per share for 2021 are expected to be in the 28 to 30 cents range, compared to an earlier range of 12 to 14 cents. Analysts had asked for earnings per share of 20 cents.
On Monday, Under Armor agreed to pay the Securities and Exchange Commission $ 9 million to pay fees that misled investors from 2015-2016 by posting revenue of $ 408 million, which is expected will be completed in the coming quarters.
The retailer paid the fees without approving or denying the findings in the SEC’s order. Under Armor had also responded to requests from the U.S. Department of Justice for documents and information, announcing on Monday that the DOJ had not received any requests since the second quarter of 2020.
At the close of trading on Monday, Under Armor stocks were up more than 40% since the start of the year. The company has a market capitalization of $ 10 billion.
The full press release on Under Armor’s earnings can be found here.
WATCH LIVE: Under Armor CEO Patrik Frisk will be interviewing CNBC’s Closing Bell in an exclusive TV interview on Tuesday at 3pm