Under Armour Stock Pops as Q3 Shows ‘Transformation Is on Track’

Shares for Under Armour are jumping in premarket trading after the firm posted third-quarter earnings that topped market watchers’ forecasts and lifted its outlook for the fiscal year.

The Baltimore-based athletic footwear and apparel maker — which has recently worked to reverse deceleration following a period of robust growth in 2016 — said its profits during the period soared 40 percent to $75.3 million, or 17 cents per diluted share. On an adjusted basis, profits were 25 cents per share, handily topping analysts’ expectations for 12 cents per share.

Revenues were in line with consensus bets — advancing 2 percent to $1.4 billion as apparel sales gained 4 percent to hit $978 million with growth in training, golf and team sports. Footwear sales were flat year over year at $285 million, while accessories revenue decreased 6 percent to $116 million, driven by declines in outdoor and training.

While analysts had been down on the company recently — citing weak footwear sales, poor product distribution and seemingly slow-churning efforts to reinvigorate the label — chairman and CEO Kevin Plank said today’s results demonstrated that the firm’s “multiyear transformation is on track.”

“As we work through this chapter, we are staying sharply focused on our brand by connecting even more deeply with our consumers while delivering industry-leading, innovative products and premium experiences,” Plank said. “Coupled with increasingly greater business discipline and resulting efficiencies, we continue to gain confidence in our long-term path and ability to deliver for our consumers, customers and shareholders.”

Overall, wholesale revenue increased 4 percent to $914 million, and direct-to-consumer revenue was flat at $465 million, representing 32 percent of total sales.

Revenues in the challenged North America market, which had showed recovery signs when it returned to growth in Q2, fell 2 percent to $1.1 billion. But international sales climbed 15 percent to $351 million, representing 24 percent of total revenue.

In line with the better-than-expected results, Under Armour raised its full-year outlook and now expects revenue to increase 3 to 4 percent reflecting a low-single-digit decline in North America and international growth of 25 percent. By category, apparel is expected to grow at a mid-single-digit rate, footwear at a low-single-digit speed, and accessories is now expected to decline at a mid-single-digit rate.

Operating loss is expected to be $50 to $55 million, versus the previously expected $60 million loss. On an adjusted basis, operating income is forecast to reach the $150 to $165 million range, versus the previous $140 to $160 million range. Adjusted diluted earnings are estimated in the range of 19 cents to 22 cents per share, versus the previous expectation of 16 cents and 19 cents per share.

As of 8 a.m. ET, Under Armour shares were in the green more than 10 percent to $20.10.

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