The interior of an Under Armor store appears on November 3, 2021 in Houston, Texas.
Brandon Bell | Getty Images
Under Armor sees a difficult year ahead, plagued by global supply chain challenges and another round of restrictions on Covid in China that hit demand.
The sports shoe and clothing maker released a disappointing outlook for fiscal year 2023 on Friday, citing an unexpected loss for the quarter ended March 31 and sales that were below Wall Street estimates.
The news drove investors away, with Under Armor shares falling nearly 20% in preliminary trading.
Also on Friday, rival Adidas said its growth in 2022 would reach the lower end of a forecast range due to the “serious impact” of coronavirus-related lockdowns in China. Adidas now sees its sales in the greater China area fall sharply this year.
See how Under Armor did in the quarter ended March 31, compared to what Wall Street expected, based on a Refinitiv survey of analysts:
- Loss per share: Adjusted 1 cent against expected gains of 6 cents
- Income: $ 1.3 billion versus $ 1.32 billion expected
Under Armor reported net loss for the quarter of $ 59.6 million, or 13 cents a share, compared with a net income of $ 77.8 million, or 17 cents a share, a year earlier.
Excluding one-off items, he lost a penny per share. Analysts were looking for adjusted earnings per share of 6 cents.
Sales rose to $ 1.3 billion from $ 1.26 billion a year earlier. That lost estimates of $ 1.32 billion.
In North America, sales rose 4% to $ 841 million. Its international operations, however, rose just 1% to $ 456 million, down 14% in the Asia-Pacific region, which includes China.
Not only is China a growing market for Under Armor trying to gain new customers, it is also a major hub for much of the sportswear industry. Some international companies, including Apple and Estee Lauder, have warned in recent days that moving out of China’s Covid controls would hurt their businesses.
In the 12 months to December 31, Under Armor produced approximately 67% of its garments and accessories in China, Vietnam, Jordan, Malaysia and Cambodia. And virtually all of her shoes were made in China, Vietnam and Indonesia, according to an annual report.
For fiscal year 2023, Under Armor expects to earn between 63 cents and 68 cents per share on an adjusted basis, which is lower than analysts’ expectations for 86 cents.
He sees sales increase by 5% to 7% from the previous year. Analysts were looking for a 5.4% increase.
Under Armor said the outlook was taking into account three percentage points of headwinds due to its decision to cancel certain orders with suppliers due to capacity issues and supply chain delays.
The financial year of Under Armor lasts from April 1 to March 31 of the following year.
CEO Patrik Frisk said the brand should return to providing “sustainable, profitable returns” as global supply challenges and the emerging impact of Covid-19 in China are smoothed out.
Find the full financial release from Under Armor here.
This story is unfolding. Check again for updates.
Under Armor (UAA) reports sales below Wall Street estimates
Source link Under Armor (UAA) reports sales below Wall Street estimates