Under Armour Reports Lackluster Earnings, Cuts Forecast

Under Armour reported $1.35 billion in first-quarter revenue, just slightly above analysts’ estimates of $1.34 billion.

The company’s revenue was partially attributed to higher prices. Under Armour recorded $7.7 million in net income — a steep drop from last year’s $59.2 million — and just $34.5 million in operating income, compared to the $121.2 million reported the same period the year prior.

• Wholesale revenue increased 3% to $792 million.
• Direct-to-consumer revenue dropped 7% to $521 million mainly due to an 8% decline in owned-and-operated revenue.
• Ecommerce revenue, which represented 39% of the quarter’s direct-to-consumer business, fell 6%.

Footwear revenue increased 1% to $347 million, apparel dipped 1% to $868 million, and accessories dropped 13% to $97 million.

Under Armour’s selling, general, and administrative expenses increased 9% to $596 million, including legal expenses. 

The former UCLA sponsor settled a lawsuit with the school at the end of May that saw Under Armour shell out $67.5 million. UCLA had accused Under Armour in 2020 of illegally ending their 15-year, $280 million agreement.

Ominous Outlook

The retailer cut its profit forecast for the fiscal year, primarily due to more promotions on athletic apparel cutting into margins. 

Under Armour still expects revenue growth of 5% to 7%, but operating income is now projected to reach $300 to $325 million, a notable decline from the previous range of $375 million to $400 million.