Under Armour, Inc. (NYSE: UAA) shares plummeted in the premarket after the Baltimore-based sportswear company reported a massive loss and provided a bleak outlook for its transition quarter.
Under Armour’s most recent three-month period is a “transition quarter” as the company changes its fiscal year. The fiscal year 2023 of Under Armour began on April 1 and will end on March 31, 2023.
Under Armour, based in Baltimore, reported a loss of $60 million, or $0.13 per share, for the fiscal quarter ending March 31, compared to a profit of $78.5 million, or $0.17 per share, in the same quarter last year.
Under Armour’s sales were slightly lower than expected, while gross margin fell more than expected due to higher freight costs.
The company anticipates earnings of $0.63 to $0.68 per share in fiscal 2023. For the fiscal year ending March 31, 2023, the current consensus earnings estimate is $0.79 per share.
UAA stock was trading at $11.98 at the time of writing, representing a 16% loss.
Transition Quarter Highlights
- Revenue was up 3% to $1.3 billion (up 4% currency-neutral) compared to the prior year.
- Gross margin decreased 350 basis points to 46.5% compared to the prior year, driven primarily by elevated freight expenses.
- Selling, general & administrative expenses increased 16% to $594 million.
- Restructuring and impairment charges were $57 million.
- Operating loss was $46 million. Adjusted operating income was $11 million.
- The net loss was $60 million. The adjusted net loss was $3 million.
- The diluted loss per share was $0.13. Adjusted diluted loss per share was $0.01.
- Inventory was down 3% to $824 million.
- Cash and Cash Equivalents were $1.0 billion at the end of the quarter, and no borrowings were outstanding under the company’s $1.1 billion revolving credit facility.
“Having successfully executed a multi-year transformation and after delivering a record year in 2021 – we are continuing to serve the needs of athletes amid an increasingly more uncertain marketplace. As global supply challenges and emergent COVID-19 impacts in China eventually normalize, we are confident that the strength of the Under Armour brand coupled with our powerful growth strategy positions us well to deliver sustainable, profitable returns to shareholders over the long-term.”
Under Armour President and CEO Patrik Frisk
Under Armour announced in February 2022 that its Board of Directors had authorized the repurchase of up to $500 million of its outstanding Class C common stock. An initial $300 million in share repurchases was completed in early May as part of an accelerated share repurchase plan. The company’s repurchase authorization currently stands at around $200 million.