Under Armour’s plan to recalibrate the business after a period of softening growth is showing new signs of progress.
The Baltimore-based athletic brand today posted fourth-quarter earnings and sales that topped analysts’ bets — two years into the rollout of a strategy focused on operational efficiency improvements as well as product innovation.
The company said its sales during the quarter ended Dec. 31 rose 2 percent to $1.39 billion, just above the $1.37 billion market watchers predicted. On a reported basis, Under Armour reversed its year-ago losses to post profits of $4.2 million, or 1 cent per share. Adjusted earnings were $42 million, or 9 cents per share, handily topping the 4 cents per share analysts had expected.
Still, the firm’s struggling North America business could have a ways to go before progress becomes consistent. (Following a period of staleness, North America sales returned to growth in the second quarter of 2018, posted in July.) Sales in the region fell 6 percent to $965 million as international business continued to gain, increasing 24 percent to $395 million.
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Even as Under Armour focuses on injecting innovation into the footwear side of its business, that, too, could take time to yield long-term growth. Footwear revenue decreased 4 percent to $235 million, primarily driven by lower sales in the off-price channel as the firm cut back discounts to focus on premium offerings from Stephen Curry’s line as well as its HOVR franchise. Accessories revenue also dipped 2 percent to $108 million as apparel remained in the green, up 2 percent to $970 million with growth in the train category.
“Our 2018 results demonstrate significant progress against our multiyear transformation toward becoming an even stronger brand and more operationally excellent company,” said Under Armour chairman and CEO Kevin Plank. “As we look ahead to 2019, our accelerated innovation agenda, disciplined go-to-market process and powerful consumer-centric approach gives us increasingly greater confidence in our ability to deliver for Under Armour athletes, customers and shareholders.”
For the full year, Under Armour reported overall sales growth of 4 percent to $5.2 billion, with adjusted profits totaling $122 million, or 27 cents per share. (On a reported basis, the firm posted a net loss of $46 million.)
The company maintained 2019 fiscal year guidance it offered up during its investor day in December — calling for revenue to rise 3 to 4 percent, reflecting flat results for North America and a low-double-digit percentage rate increase in its international business. Earnings per share are forecast to land in the range of 31 cents to 33 cents.
On the heels of the better-than-expected results, Under Armour stock has remained in the green in premarket trading for much of the morning. As of 8:15 a.m. ET, UA shares were up 2.5 percent to $21.30.