With new President and CEO Stephanie Linnartz slated to begin her Under Armour career at month’s end, the company reported stronger third-quarter results for the period ended Dec. 31. Operating income increased by 9.9 percent to $94.7 million from $86.1 million as Ebit expanded by 37 percent to $140.4 million. While period revenues grew by 3.4 percent to more than $1.58 billion from $1.53 billion, the group did suffer a 650 basis-point decline in gross margin to 44.2 percent from 50.7 percent.
| Under Armour | |||
|---|---|---|---|
| Statements of operation ($ thousand) | |||
| 2022 | 2021 | Change | |
| Q3 | |||
| Net revenues | 1,581,781 | 1,529,205 | 3.4% |
| Cost of goods sold | 883,376 | 753,272 | 17.3% |
| Gross profit | 698,405 | 775,933 | -10.0% |
| Selling, general and administrative expenses | 603,746 | 675,666 | -10.6% |
| Restructuring and impairment charges | – | 14,136 | – |
| Income from operations | 94,659 | 86,131 | 9.9% |
| Net interest income | -1,615 | -7,595 | 78.7% |
| Net other income | 47,312 | 24,037 | 96.8% |
| Pre-tax income | 140,356 | 102,573 | 36.8% |
| Tax | 18,811 | -6,798 | – |
| Net | 121,617 | 109,657 | 10.9% |
| 9 months | |||
| Net revenues | 4,504,723 | 4,426,271 | 1.8% |
| Cost of goods sold | 2,462,287 | 2,193,413 | 12.3% |
| Gross profit | 2,042,436 | 2,232,858 | -8.5% |
| Selling, general and administrative expenses | 1,793,884 | 1,820,053 | -1.4% |
| Restructuring and impairment charges | – | 33,405 | – |
| Income from operations | 248,552 | 379,400 | -34.5% |
| Net interest income | -11,175 | -30,163 | 63.0% |
| Net other income | 27,300 | -43,933 | – |
| Pre-tax income | 264,677 | 305,304 | -13.3% |
| Tax | 46,719 | 22,191 | 110.5% |
| Net | 216,224 | 282,308 | -23.4% |
| Source: Under Armour | |||
The EMEA was the brand’s strongest region during the period, with solid gains across the wholesale and DTC channels. EMEA operating income increased by 28 percent to $30.9 million from $24.3 million as revenues climbed 33 percent higher to $265.3 million from $200.2 million. Elsewhere, North America operating income slipped by 18 percent to $198.9 million on a 2.4 percent revenue drop to $1.04 billion; Asia-Pacific operating income fell nearly 51 percent to $10.8 million on an 8.8 percent sales dip to $198.0 million despite solid e-commerce momentum outside China; and Latin America operating income improved by 42 percent to $5.8 million as the region’s revenues increased by 45 percent to $63.8 million.
By product category, Under Armour’s apparel revenues slipped by 2.1 percent to $1.075 billion despite strength in golf and team sports apparel; footwear sales rose by 25 percent to $354.4 million with cited strength from the HVR Mach 3 running shoe, Curry 10 basketball style and a solid contribution from American football cleats; accessories revenues fell by 1.7 percent to $104.9 million; and licensing sales declined by 18.8 percent to $29.7 million. By distribution channel, wholesale revenues grew by 6.8 percent to $819.8 million and direct-to-consumer sales fell slightly by 0.7 percent to $715.2 million.
| Under Armour | |||
|---|---|---|---|
| Revenues - Q3 ($ thousand) | |||
| 2022 | 2021 | Change | |
| By category | |||
| Apparel | 1,075,714 | 1,098,784 | -2.1% |
| Footwear | 354,389 | 282,721 | 25.3% |
| Accessories | 104,875 | 106,650 | -1.7% |
| Net sales | 1,534,978 | 1,488,155 | 3.1% |
| Licensing | 29,734 | 36,606 | -18.8% |
| Corporate other | 17,069 | 4,444 | 284.1% |
| Total net revenues | 1,581,781 | 1,529,205 | 3.4% |
| By channel | |||
| Wholesale | 819,781 | 767,896 | 6.8% |
| DTC | 715,197 | 720,259 | -0.7% |
| Net sales | 1,534,978 | 1,488,155 | 3.1% |
| Licensing | 29,734 | 36,606 | -18.8% |
| Corporate other | 17,069 | 4,444 | 284.1% |
| Total net revenues | 1,581,781 | 1,529,205 | 3.4% |
| By segment | |||
| North America | 1,037,637 | 1,063,290 | -2.4% |
| EMEA | 265,250 | 200,203 | 32.5% |
| Asia-Pacific | 198,021 | 217,223 | -8.8% |
| Latin America | 63,804 | 44,045 | 44.9% |
| Corporate other | 17,069 | 4,444 | 284.1% |
| Total net revenues | 1,581,781 | 1,529,205 | 3.4% |
| Revenues - 9 months ($ thousand) | |||
| 2022 | 2021 | Change | |
| By category | |||
| Apparel | 2,982,410 | 3,031,208 | -1.6% |
| Footwear | 1,077,525 | 955,080 | 12.8% |
| Accessories | 312,823 | 344,498 | -9.2% |
| Net sales | 4,372,758 | 4,330,786 | 1.0% |
| Licensing | 90,992 | 90,966 | 0.0% |
| Corporate other | 40,973 | 4,519 | 806.7% |
| Total net revenues | 4,504,723 | 4,426,271 | 1.8% |
| By channel | |||
| Wholesale | 2,559,621 | 2,446,162 | 4.6% |
| DTC | 1,813,137 | 1,884,624 | -3.8% |
| Net sales | 4,372,758 | 4,330,786 | 1.0% |
| Licensing | 90,992 | 90,966 | 0.0% |
| Corporate other | 40,973 | 4,519 | 806.7% |
| Total net revenues | 4,504,723 | 4,426,271 | 1.8% |
| By segment | |||
| North America | 2,958,816 | 3,004,645 | -1.5% |
| EMEA | 733,110 | 648,628 | 13.0% |
| Asia-Pacific | 600,415 | 621,542 | -3.4% |
| Latin America | 171,409 | 146,937 | 16.7% |
| Corporate other | 40,973 | 4,519 | 806.7% |
| Total net revenues | 4,504,723 | 4,426,271 | 1.8% |
| Source: Under Armour | |||
Under Armour’s current FY23 outlook calls for adjusted operating income of $290 to $310 million, low-single-digit improvement in total revenues and gross margin decline likely at the high-end of a 375 to 475 percent range.
The group ended Q3 with 243-owned and operated retail stores outside the U.S., including 78 Brand Houses and 165 Factory Houses. The North American count was 18 Brand Houses and 177 Factory Houses.
