Under Armor shoes are seen inside a store on November 03, 2021 in Houston, Texas.
Brandon Bell | Getty Images
under protection reported holiday quarter income It beat Wall Street expectations on Wednesday, but the retailer is facing a growing inventory glut that promotions and deep discounts have failed to alleviate.
Shares of the company rose in light trading ahead of the market.
Despite inventory issues, the sportswear company raised its profit outlook for the year. He now expects to see earnings per share of 52 cents to 56 cents, down from the previously forecast range of 44 cents to 48 cents.
Here’s how Under Armor fared in its third fiscal quarter compared to what Wall Street expected, based on a Refinitiv analyst survey:
- Earnings per share: 16 cents adjusted vs. 9 cents expected
- Income: $1.58 billion against $1.55 billion expected
The company’s reported net income for the three-month period ended Dec. 31 was $121.62 million, down from $109.66 million a year earlier. Sales reached $1.58 billion, up from $1.53 billion a year earlier.
Like other retailers, the sportswear company has been struggling with an overabundance of inventory caused by supply chain issues and changing consumer demand trends. In its third fiscal quarter, Under Armor’s inventory grew 50% year over year. Despite strong promotions and discounts during its crucial holiday quarter, inventory was up slightly from the previous quarter.
Promotions and discounts continued to squeeze Under Armour’s margins, which were down 6.5% from the same period a year earlier.
The company saw a 7% increase in wholesale revenue and a decline in direct-to-consumer sales.
While sales fell 9% in Asia, Under Armor saw big gains internationally. Revenue increased 45% in Latin America and 32% in Europe, Middle East and Africa.
A 2% decline in apparel, which accounts for the majority of Under Armour’s sales, was offset by a 25% increase in footwear revenue.
In December, the company announced former Marriott executive Stephanie Linnartz would take over as CEO and taking office on February 27. Colin Browne has served as interim CEO since June after the retailer’s former senior executive, Patrik Frisk, quit unexpectedly in May.
Under Armor has worked to develop its e-commerce transactions and leverages Linnartz’s experience leading Marriott’s multi-billion dollar digital transformation to accelerate the company’s digital initiatives.
E-commerce sales increased 4% in the quarter and accounted for 36% of Under Armour’s total DTC revenue.