Under Armor (UAA) Announces Superior Fourth Quarter 2021 Results

Under Armor shoes are seen inside a store on November 03, 2021 in Houston, Texas.

Brandon Bell | Getty Images

Under Armor shares fell on Friday despite the retailer reporting fiscal fourth-quarter earnings and sales ahead of analysts’ estimates as a gloomy outlook hampered by ongoing supply chain constraints overshadowed these results.

The company also warned that rising freight costs will weigh on profit margins in the coming months. Under Armor has previously said it pays for more expensive air freight to ship goods from overseas.

The stock recently fell about 2% in premarket trading.

“As we navigate continued uncertainty in the market, we remain focused on delivering cutting-edge innovation,” CEO Patrik Frisk said in a press release.

Here’s how the company performed in the three months ended Dec. 31 compared to what analysts expected, based on Refinitiv estimates:

  • Earnings per share: 14 cents adjusted vs. 7 cents expected
  • Revenue: $1.53 billion vs. $1.47 billion expected

Under Armor reported net income of $109.7 million, or 23 cents per share, compared with $184.5 million, or 40 cents per share, a year earlier. Excluding one-time items, it earned 14 cents per share, beating analysts’ estimates for 7 cents.

Revenue rose to $1.53 billion from $1.4 billion a year earlier. That beat analysts’ expectations for $1.47 billion.

Net sales in North America increased by 15%, while international sales increased by 3%.

In total sales, clothing increased by 18%, footwear by 17%, but accessories fell by 27%.

A year earlier, Under Armor saw accessory sales soar as consumers bought baseball gloves, water bottles and sunglasses for outdoor activities during the Covid pandemic. The brand has also seen an increase in sales of face masks.

Last year, Under Armor announced it was changing its fiscal year end date from December 31 to March 31. After a three-month transition period from January 1, 2022 to March 31, Under Armor’s next exercise will run from April 1 to March 31. March 31, 2023.

The retailer gave an outlook for the transition quarter on Friday. Sales are expected to grow mid-single-digit, compared to earlier expectations of a low-single-digit increase. It said, however, that forecast includes about 10 percentage points of headwinds related to reductions in its spring and summer backlog due to ongoing supply chain constraints.

Earnings for this period are expected to be in the range of 2 cents to 3 cents per share.

BMO Capital Markets analyst Simeon Siegel said the outlook for Under Armor was likely conservative. As Under Armor continues to pull out of discount retailers and sell more higher priced apparel and footwear, the brand should continue to be elevated, he said.

Under Armor also cut the top end of its ongoing restructuring plan. It now expects to book between $525 million and $550 million in charges related to that plan, down from an earlier range of $525 million to $575 million. Under Armor said it has recorded $514 million in pretax charges to date.

Read the full Under Armor earnings press release here.

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