Market Watch: Under Armour Earnings… OR Wrap

The Week Ahead

Tuesday, Jan. 28:
U.S. Consumer Confidence

Thursday, Jan. 30:
Amazon.com Inc. Q4 results
Under Armour Inc. Q4 results
U.S. initial jobless claims
U.S. continuing jobless claims

Stock Watch

Concerns about the outlook for retail sales have intensified after a slew of companies delivered unfavorable updates from the holiday season, which was marred by slow foot traffic and margin-crimping discounting.

Bucking the trend of slowing sales is Under Armour Inc., which analysts said has continued to benefit from the recent temperature drop in line with most outdoor footwear and apparel retailers. Deckers Outdoor Corp. and Columbia Sportswear Co. also are expected to be among the key beneficiaries of the ongoing winter storms and deep freeze, according to analysts.

The Street predicts Under Armour will post earnings per share of 53 cents when it delivers its fourth-quarter results on Jan. 30. Revenue growth is forecast to be 22.6 percent, higher than the company’s guidance of 20.7 percent growth to $610 million. 

Outdoor Retailer Recap

After speaking with vendors at the recent trade show in Salt Lake City, Buckingham Research Group analyst John Zolidis said one of the key takeaways was that sales growth in running footwear remains strong, which is particularly positive for Finish Line Inc., Foot Locker Inc., Deckers and Nike Inc. Zolidis expects Under Armour will continue to gain momentum in 2014 following a strong holiday selling season, driven in part by robust sales of women’s activewear.

Sam Poser, an analyst at Sterne Agee, predicted Deckers will be one of the biggest winners going forward, given the combination of favorable weather patterns that are clearing inventories and strong sales for the company’s brands in fall ’13. “Retailers are writing [their] Ugg Australia fall ’14 orders earlier this year, as the cold weather and strong sell-throughs are providing a sense of urgency to secure product,” he wrote in a note to clients.

Zolidis forecast a jump in outdoor footwear prices this year, with mid-single-digit growth. “Based on our conversations with vendors at the show, we continue to hear that average selling prices will rise in 2014,” he wrote in a note to investors.

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