Under Armour Turnaround Shows Resilience With Sales Beating Expectations

Under Armour Inc. reported sales that topped Wall Street expectations, boosting the comeback bid of the sports gear brand.

Revenue in the company’s fiscal fourth quarter fell 11 percent to $1.2 billion. Analysts on average expected a decline of 13 percent.

Under Armour shares were little changed on Tuesday at 9:38 a.m. The stock had been down 25 percent this year through Monday’s close.

Chief executive officer Kevin Plank is trying to turn around the company he founded after returning to the role last year to restructure the business. That has been made more difficult weakening consumer sentiment and US President Donald Trump‘s trade war.

“The new developing tariffs will create, obviously, some significant headwind,” chief financial officer Dave Bergman said on a conference call with investors and analysts.

The company expects revenue to fall 4 percent to 5 percent in the next quarter, worse than the 1.7 percent drop analysts projected. The company didn’t provide full-year guidance, citing “potential demand-related and cost impacts from tariffs.”

China Exposure

Under Armour has had little exposure to Trump’s tariffs so far. The company has said it sources roughly 3 percent of products imported into the US from China. The US hit the country with tariffs as high as 145 percent last month, but plans to reduce those levies this week.

The company, which was among the firms that asked the White House earlier this month to exempt footwear from tariffs, sources the bulk of its goods from countries such as Vietnam, Indonesia, Jordan and Cambodia. All could see higher US levies put in place in July when a 90-day pause for trade negotiations ends.

Under Armour is exploring options to share costs with partners and shifting its supply chain to minimise exposure to harder-hit countries. Bergman said the company will look to protect margins by raising prices in certain cases.

Plank has been reducing discounts and cutting inventory while refocusing on core products and boosting marketing efforts. Under Armour is nearly done cutting a quarter of the different products it offers, he said. In March, the brand secured a highly coveted licensing deal with the National Football League after a five-year hiatus.

“Our ambition, put simply, is to sell so much more of so much less at a much higher full price,” said Plank.

By Kim Bhasin and Carrington York

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