An e-commerce boost and gradual store reopenings have led Under Armour Inc. to a better-than-anticipated second quarter.
For the three months ended June 30, the sportswear giant logged an adjusted loss of $141 million, with a loss of 31 cents per share on an adjusted basis. Its revenues declined 41% to $708 million, with “significant” e-commerce growth around the world. Market watchers had forecasted a loss of 41 cents per share and sales of $558.52 million.
“While we performed better than expected, we still experienced a significant decline in revenue across all markets,” president and CEO Patrik Frisk said in a statement. “In navigating this environment, our team continues to respond strategically and methodically — amplifying Under Armour’s connection with our consumers through innovative digital activations, proactively managing our cost structure and working to harness our brand strength amid shifts in consumer behavior to emerge as a stronger company.”
Under Armour’s footwear revenues fell 35% to $185 million, while apparel sales dropped 42% to $426 million. Those of accessories, on the other hand, sank 47% to $56 million.
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Wholesale revenues plunged 58% to $299 million, and direct-to-consumer sales were down 13% to $368 million. In its home turf of North America, revenues decreased 45% to $450 million, while its international business saw sales slide 34% to $224 million.
Through mid-May, the Baltimore-based company estimated that approximately 80% of its locations were shuttered. As of today, most of its brick-and-mortar fleet is back in business, with Under Armour reporting a higher rate of conversion despite “considerably lower” traffic trends compared with the prior year period. (It expects traffic trends to remain at low levels for the remainder of the year.)
“We are encouraged by some of the momentum we’ve experienced in June and July,” Frisk added. “However, we remain appropriately cautious with respect to the balance of 2020 due to continued uncertainty related to consumer shopping dynamics, the potential for a highly promotional environment and proactive decisions to reduce inventory purchases to be more aligned with anticipated demand related to ongoing COVID-19 impacts.”
Under Armour ended the second quarter with cash and equivalents of $1.1 billion. During the period, it amended its $1.1 billion credit agreement to improve its liquidity position, leaving it with $250 million outstanding at the end of June.