Under Armour Set for Another Positive Quarter, Analysts Say

Under Armour Inc. should continue to exceed expectations when it reports Q2 earnings on Tuesday, analysts say. The results are expected to be driven by improved product offerings, international sales and an elevated direct-to-consumer experience.

In a note to investors, William Trading analyst Sam Poser predicted Under Armour will report Q2 earnings per share of 6 cents and a revenue increase of 70% to $1.23 billion. He added that international sales will also accelerate.

To support his forecast, Poser cited “improved apparel and footwear product offerings, much improved allocation and segmentation strategies, that gelled in 2020, adequate inventory levels to supply at-once orders to retailers and support UAA’s DTC business due to better-than-expected demand driven by first stimulus, and second, better product offerings.”

Analysts say Under Armour will also see success in the running category, thanks to the brand’s innovative Hovr technology for footwear. This area will likely see more positive results as more consumers focus on healthier lifestyles and exercise, analysts at Cowen Equity Research wrote in a note.

“Under Armour has achieved a much more consistent message with the Focused Performer, and now has improved tools to react to trends and read the consumer,” read the Cowen report.

In May, Under Armour beat expectations and raised its outlook for the year. The company posted adjusted profits of $75 million, or adjusted earnings of 16 cents per share. Revenues increased 35% to $1.3 billion.

Despite the positive results in Q1, analysts were previously skeptical of Under Armour’s growth potential for the long-term, given supply chain and logistics challenges, the brand’s comparatively slow direct-to-consumer growth, a lack of focus on the athleisure trend, and the divestment of the MyFitnessPal app, which was sold to Francisco Partners for $345 million in Q4.

Now, analysts appear more confident in Under Armour’s potential for growth, especially as the brand zeroes in on an aggressive direct-to-consumer strategy. Under Armour said in 2020 that it plans to cut ties with certain wholesale retailers, starting in the second half of 2021.

“As UAA continues to execute on its omnichannel strategy, we are encouraged by an increasingly elevated direct-to-consumer experience coupled with a data-rich consumer feedback loop,” Cowen analysts wrote.

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