Under Armour Q3 Earnings Beat, Gross Margin Rises Y/Y, FY25 View Up

Under Armour, Inc. UAA reported third-quarter fiscal 2025 results, wherein revenues and earnings exceeded the Zacks Consensus Estimate. However, the top and bottom lines decreased year over year.The results highlight the impact of a refined brand focus, strengthened by an updated product strategy, enhanced marketplace discipline and a shift to a category-led operating model. The strong performance prompted management to raise the fiscal 2025 outlook.See the Zacks Earnings Calendar to stay ahead of market-making news.Under Armour, Inc. Price, Consensus and EPS Surprise  Under Armour, Inc. price-consensus-eps-surprise-chart | Under Armour, Inc. QuoteUnder Armour’s Quarterly Performance: Key InsightsThe Baltimore, MD-based company reported adjusted earnings of 8 cents a share, which beat the Zacks Consensus Estimate of 3 cents. The reported figure decreased from 19 cents a share in the year-ago period.Meanwhile, net revenues of $1,401 million beat the Zacks Consensus Estimate of $1,338 million but decreased 5.7% from the prior-year quarter. The metric declined 6% on a currency-neutral basis.Wholesale revenues fell 1% year over year to $704.8 million, while direct-to-consumer revenues declined 9.1% to $672.9 million. Revenues from company-owned and operated stores dipped 1%, whereas e-commerce revenue dropped 20% due to planned reductions in promotional activities. E-commerce accounted for 39% of the total direct-to-consumer business for the quarter.Breaking Down Under Armour’s Top LineBy product category, Apparel revenues declined 5% year over year to $966.1 million, beating the Zacks Consensus Estimate of $909.2 million. Footwear revenues decreased 9% to $301.2 million, lagging the consensus estimate of $303.6 million. Revenues from the Accessories category rose 5.7% to $110.4 million, outperforming the consensus estimate of $98 million. Meanwhile, Licensing revenues dropped 17.8% to $23.9 million, falling short of the consensus estimate of $45.3 million.Revenues from North America declined 7.8% to $843.6 million, exceeding the Zacks Consensus Estimate of $790.7 million. Meanwhile, revenues from the international business decreased 1.4% (down 2% on a currency-neutral basis) to $558 million. Within the international segment, revenues from Europe, the Middle East and Africa ("EMEA") increased 4.9% year over year to $297.9 million, beating the consensus estimate of $289.5 million. Revenues from the Asia-Pacific dropped 5.1% to $201.1 million, surpassing the consensus estimate of $195.5 million. Latin America saw a 15.5% decline to $59 million, lagging the consensus estimate of $68.4 million.Focus on UAA’s MarginsUnder Armour reported gross profit of $665.2 million, down 0.8% year over year. The company’s gross margin expanded 240 basis points to 47.5% from the prior-year period. This was driven by reduced direct-to-consumer discounting, lower product and freight costs and favorable foreign currency fluctuations.Adjusted selling, general, and administrative expenses increased 5% year over year to $605.5 million, led by higher marketing expenses. Adjusted operating income came in at $59.6 million, down from $92 million in the year-ago period.Under Armour Financial SnapshotUAA ended the quarter with cash and cash equivalents of $726.9 million, long-term debt (net of current maturities) of $595.2 million, and total stockholders' equity of $1.98 billion. For fiscal 2025, management expects capital expenditure between $170 million and $180 million.In the fiscal third quarter, Under Armour repurchased $25 million worth of its class C common stock, retiring 2.8 million shares. As of Dec. 31, 2024, 8.7 million shares were repurchased for $65 million as part of a three-year, $500-million program approved by the company in May 2024.UAA Stock Past Three-Month Performance Image Source: Zacks Investment Research Sneak Peek Into UAA’s FY25 OutlookUnder Armour's fiscal 2025 outlook has been updated with several key adjustments. Revenues are expected to decline 10%, an improvement from the previous forecast of a low-double-digit percentage decline. This includes an anticipated 12-13% drop in North America compared with the prior mentioned 14-16% decline, and a mid-single-digit decrease in international sales versus the earlier mentioned low-single-digit decline. Within the international business, EMEA is expected to remain flat, while the Asia-Pacific region is projected to see a low-teen percent decline, an adjustment from the previous forecast of a high-single-digit drop. The gross margin is expected to improve 160 basis points compared with the prior mentioned 125-150 basis points, driven primarily by reduced direct-to-consumer discounting, and lower product and freight costs. Selling, general and administrative expenses are anticipated to rise at a high-single-digit percentage rate due to litigation settlement expenses. However, when excluding litigation-related costs, related insurance recoveries, anticipated transformation expenses, and impairment charges, adjusted SG&A expenses are projected to decline at a low-single-digit percentage rate. This decline compares with the previously expected low-to-mid single-digit decrease.The operating loss is projected at $179-$189 million compared with the prior mentioned $176-$196 million. Adjusted operating income is expected between $185 million and $195 million, an increase from the previously mentioned $165-$185 million, excluding the mid-point of anticipated restructuring charges and transformation expenses, litigation settlement expenses and related insurance recoveries, and impairment charges.Loss per share is expected between 48 cents and 50 cents, a slight adjustment from the prior mentioned 48-51 cents. Adjusted earnings per share are forecast between 28 cents and 30 cents, up from the earlier mentioned 24-27 cents.This Zacks Rank #3 (Hold) stock has declined 21.5% in the past three months against the industry’s rise of 12.1%.Key PicksSome better-ranked stocks are Urban Outfitters Inc. URBN, Genesco Inc. GCO and Deckers Outdoor Corporation DECK.Urban Outfitters is a lifestyle specialty retailer that offers fashion apparel and accessories, footwear, home décor and gift products. The company flaunts a Zacks Rank of (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for Urban Outfitters’ fiscal 2025 earnings and revenues indicates growth of 20.6% and 7.5%, respectively, from the fiscal 2024 reported levels. URBN delivered a trailing four-quarter average earnings surprise of 22.8%.Genesco is a specialty retail and branded company selling footwear and accessories in retail stores. It currently sports a Zacks Rank #1.The Zacks Consensus Estimate for Genesco’s fiscal 2025 earnings and revenues indicates growth of 67.9% and 1.5%, respectively, from the fiscal 2024 reported figures. GCO delivered a trailing four-quarter average earnings surprise of 36.9%.Deckers is a leading designer, producer and brand manager of innovative, niche footwear and accessories. It flaunts a Zacks Rank of 1 at present.The Zacks Consensus Estimate for DECK’s fiscal 2025 earnings and revenues implies growth of 20% and 15.3%, respectively, from the year-ago actuals. DECK delivered a trailing four-quarter average earnings surprise of 36.8%.Free Today: Profiting from The Future’s Brightest Energy SourceThe demand for electricity is growing exponentially. At the same time, we’re working to reduce our dependence on fossil fuels like oil and natural gas. Nuclear energy is an ideal replacement.Leaders from the US and 21 other countries recently committed to TRIPLING the world’s nuclear energy capacities. This aggressive transition could mean tremendous profits for nuclear-related stocks – and investors who get in on the action early enough.Our urgent report, Atomic Opportunity: Nuclear Energy's Comeback, explores the key players and technologies driving this opportunity, including 3 standout stocks poised to benefit the most.Download Atomic Opportunity: Nuclear Energy's Comeback free today.Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Deckers Outdoor Corporation (DECK): Free Stock Analysis Report Urban Outfitters, Inc. (URBN): Free Stock Analysis Report Genesco Inc. (GCO): Free Stock Analysis Report Under Armour, Inc. (UAA): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks