Shares for Under Armour were down nearly 10% in Monday premarket trading following the release of a mixed earnings report that revealed the impact of the coronavirus pandemic on its business.
The sportswear giant posted a net loss of $589.7 million, or a loss of $1.30 per share, in the first quarter. On an adjusted basis, its net loss was $152 million, or 34 cents per share. Revenues, meanwhile, decreased 23% to $930.2 million, with the company attributing roughly 15 percentage points of that drop to the COVID-19 health crisis.
Analysts had anticipated a loss of 21 cents per share and sales of $895.7 million. As of 8:45 a.m. ET, Under Armour’s stock was at $9.01.
In a statement, president and CEO Patrik Frisk said the athletic apparel company had seen progress in its business during the months of January and February. However, it experienced a “significant decline in revenue across all markets” since mid-March, when it was forced to shutter many of its outposts to help curb the spread of the novel coronavirus.
In its home turf of North America — Under Armour’s largest region of business, accounting for about 65% of its total sales — revenues were down 28% to $609 million. Meanwhile, international sales tumbled 12% to $287 million.
What’s more, the brand’s footwear sales fell 28% to $210 million, while apparel slid 23% to $598 million. Accessories revenues for the period ended March 31 also dipped 17% to $68 million.
“As a result, like so many businesses, we’ve had to make very difficult decisions,” Frisk added, “including temporarily laying off teammates in our U.S. retail stores and distribution centers along with other actions to ensure we protect Under Armour’s financial stability.” (The company’s board of directors have taken a 25% cut to their compensation, while all EVP-level leaders and top executives have seen their salaries reduced by 25%.)
This year, Under Armour intends to slash about $325 million in operating costs to help bolster the company as it navigates through the pandemic. As part of its restructuring plan, which was approved by the board at the end of March, it expects to see $475 million to $525 million in pretax restructuring costs.
At the end of the first quarter, the Baltimore-based chain had cash and its equivalents of $959 million. It also anticipates spending roughly $100 million on capital expenditures this year, compared with prior expectations of $160 million.
“As we continue to navigate this crisis, our balance sheet remains well managed, and our leadership team is taking decisive actions to execute against our continued transformation,” Frisk added. “We remain focused on driving greater efficiencies across the core elements of our business by working to identify additional opportunities to emerge with stronger and greater capabilities over the long term.”