Under Armour Stock Gains on Q2 Earnings Beat & Raised FY2025 View

Shares of Under Armour, Inc. UAA surged 27.2% in yesterday's trading session, fueled by the company’s better-than-expected second-quarter results. The strong performance prompted management to raise the fiscal 2025 outlook. While revenues saw a year-over-year decline, the company’s bottom line showed improvement compared to the same period last year.Under Armour’s Quarterly Performance: Key InsightsThe Baltimore, MD-based company reported adjusted earnings of 30 cents a share, which beat the Zacks Consensus Estimate of 19 cents. This figure increased from 24 cents a share reported in the year-ago period.See the Zacks Earnings Calendar to stay ahead of market-making news.Meanwhile, net revenues of $1,399 million came ahead of the Zacks Consensus Estimate of $1,383 million but decreased 10.7% from the prior-year quarter. The metric declined 10% on a currency-neutral basis.Wholesale revenues fell 12.1% to $826 million, while direct-to-consumer revenues saw a 7.6% increase, reaching $550.3 million. Revenues from owned and operated stores remained flat, while e-commerce sales declined 21% due to a planned decrease in promotional activities. E-commerce revenues accounted for 30% of the total direct-to-consumer business during the quarter.Under Armour, Inc. Price, Consensus and EPS Surprise Under Armour, Inc. price-consensus-eps-surprise-chart | Under Armour, Inc. QuoteBreaking Down Under Armour’s Top LineBy product category, Apparel revenues declined 11.5% year over year to $947.2 million compared to the Zacks Consensus Estimate of $947.6 million. Footwear revenues decreased 10.9% to $312.8 million, exceeding the consensus estimate of $304.1 million. Revenues from the Accessories category rose 2.1% to $116.4 million, outperforming the consensus estimate of $99.6 million. Meanwhile, Licensing revenues dropped 13.4% to $24.8 million, falling short of the consensus estimate of $51 million.Revenues from North America declined 12.9% to $863.3 million, exceeding the Zacks Consensus Estimate of $830.7 million. Meanwhile, revenues from the international business decreased 6.1% (down 5.2% on a currency-neutral basis) to $538 million. Within the international segment, revenues from Europe, the Middle East and Africa ("EMEA") fell 1.4% to $283.2 million, just below the consensus estimate of $283.8 million. Revenues from the Asia-Pacific ("APAC") dropped 10.5% to $207.7 million, slightly below the consensus estimate of $208.4 million, while Latin America saw a 12.5% decline to $46.9 million, underperforming the consensus estimate of $56.4 million.Focus on UAA’s MarginsThe company’s gross margin expanded 200 basis points to 49.8% from the prior-year period. This was driven by the decline in product and freight costs, lower discounting levels in the direct-to-consumer business and a favorable channel mix.Adjusted selling, general, and administrative (SG&A) expenses declined 13% to $530.1 million, driven by lower marketing expenses. Adjusted operating income came in at $166.1 million, up from $139.5 million reported in the year-ago period.UAA Financial SnapshotUnder Armour ended the quarter with cash and cash equivalents of $530.7 million, long-term debt (net of current maturities) of $594.6 million and total stockholders' equity of $1,985.2 million. For fiscal 2024, management expects capital expenditures between $190 million and $210 million.A Sneak Peek Into Under Armour’s FY25 OutlookUnder Armour foresees fiscal 2025 revenues to decline by a low double-digit percentage, with North American sales projected to drop 14-16% as the company undertakes a business reset in the region. Internationally, revenues are anticipated to see a low single-digit decrease, with stable results in the EMEA offset by a high single-digit decline in the APAC due to macroeconomic pressures.The gross margin is anticipated to expand by 125-150 basis points, up from the prior expectation of a 75-100 basis point improvement, driven by lower promotional activities in direct-to-consumer channels and favorable product costs.SG&A expenses are expected to rise in the mid-to-high single digits due to litigation settlement costs. Adjusted SG&A expenses are projected to decline by a low-to-mid-single-digit percentage. This includes an additional $25 million in marketing investments to support the brand’s long-term positioning.Operating loss is now projected between $176 million and $196 million, an improvement from the prior range of $220 million-$240 million. Adjusted operating income, which excludes restructuring charges, transformation costs, litigation expenses and insurance recoveries, is forecasted at $165 million to $185 million, up from the previous estimate of $140 million to $160 million.Loss per share is expected to range from 48 cents to 51 cents, an improvement from the prior estimate of 53-56 cents. Adjusted earnings per share are now projected between 24 cents and 27 cents compared to the earlier projection of 19 cents to 21 cents.UAA Expects Q3 Revenues to DeclineFor the third quarter, Under Armour anticipates a revenue decline of approximately 10%. This projection reflects ongoing challenges in the North American region and the company's proactive strategies to reduce promotional activities within its direct-to-consumer businesses. The company expects fourth-quarter revenues to face additional pressures due to timing differences between this year's and last year's flows within its North American and APAC wholesale businesses, as well as tougher year-over-year comparisons in North America Factory House.The strengthening of the U.S. dollar is also creating foreign exchange headwinds. However, the company projects third-quarter gross margin will increase by 150 to 175 basis points, driven by lower product costs from supply-chain efficiencies, favorable foreign exchange impacts, and the benefits of reduced discounting and promotions in the direct-to-consumer business.Adjusted SG&A expenses are expected to rise in the second half of the fiscal year, particularly in the third quarter, when the metric is expected to increase by a mid-single-digit percentage rate. As a result, Under Armour forecasts the third-quarter adjusted operating income in the range of $20 million-$30 million, with adjusted earnings per share projected between 2 cents and 4 cents.This Zacks Rank #3 (Hold) stock has advanced 40.6% in the past three months compared with the industry’s rise of 17.5%.Stocks to ConsiderAbercrombie & Fitch ANF, an omnichannel specialty retailer of apparel and accessories for men, women and kids, carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year revenues and earnings calls for growth of 13% and 63.4%, respectively, from the year-ago reported figures. Abercrombie & Fitch has a trailing four-quarter earnings surprise of 28%, on average.The Gap GAP, the largest specialty apparel company in the United States and a house of iconic brands, including Old Navy, Gap, Banana Republic and Athleta, carries a Zacks Rank #2. The Zacks Consensus Estimate for Gap’s current financial-year revenues and earnings suggests growth of 0.5% and 31.5%, respectively, from the year-ago reported figures. GAP has a trailing four-quarter earnings surprise of 142.8%, on average.Ralph Lauren Corporation RL, a global leader in the design, marketing and distribution of luxury lifestyle products, currently carries a Zacks Rank #2. RL has a trailing four-quarter earnings surprise of 10.3%, on average. The Zacks Consensus Estimate for Ralph Lauren’s current financial year’s sales and earnings implies growth of 1.8% and 9.9%, respectively, from the year-ago reported numbers.Free: 5 Stocks to Buy As Infrastructure Spending SoarsTrillions of dollars in Federal funds have been earmarked to repair and upgrade America’s infrastructure. In addition to roads and bridges, this flood of cash will pour into AI data centers, renewable energy sources and more.In, you’ll discover 5 surprising stocks positioned to profit the most from the spending spree that’s just getting started in this space.Download How to Profit from the Trillion-Dollar Infrastructure Boom absolutely 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 Abercrombie & Fitch Company (ANF): Free Stock Analysis Report Ralph Lauren Corporation (RL): Free Stock Analysis Report The Gap, Inc. (GAP): 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