Under Armour Shares Down 2.5% Despite Earnings Revenue Beat

Trade Under Armour Shares Your Capital Is At Risk
Analyst Team
Updated: 11 Feb 2022

Key points:

  • Under Armour reports fourth-quarter earnings
  • Revenue and earnings beat analyst expecatiosn
  • However, shares fall on outlook
  • The Best Clothing Stocks to Buy

Under Armour (NYSE: UAA) announced earnings per share of $0.14 before the bell on Friday, with revenue coming in at $1.53 billion.

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The numbers reported were against an anticipated EPS of $0.07 and revenue of $1.47 billion.

Under Armour's inventory was down 9 percent to $811 million in Q4. The company told investors its revenue growth was driven by solid performance in its owned and operated stores and 4 percent growth in eCommerce, which represented 42 percent of its total direct-to-consumer business during the quarter.

In reaction to the report, Under Armour's share price has declined 2.55% to $19.50.

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While earnings and revenue beat analyst estimates, the company pointed to supply chain constraints as to why its outlook came in below expectations.

“Amid a dynamic environment with ongoing COVID-19 impacts and resultant supply chain headwinds, I am proud of how consistently our global teams continue to execute our plan,” said Under Armour President and CEO Patrik Frisk.

“As we navigate ongoing uncertainty in the marketplace, we remain focused on delivering industry-leading innovations, premium experiences, and empowering those who strive for more,” Frisk continued.

Under Armour expects Q1 revenue to increase at a mid-single-digit rate compared to the previous expectation of a low single-digit rate increase. However, the expectation includes approximately 10 percentage points of headwinds related to reductions in the company's spring-summer 2022 order book from supply constraints associated with ongoing COVID-19 pandemic impacts.

In addition, gross margin is expected to be down 200 basis points compared to the prior year. The company said this expectation includes approximately 240 basis points of negative impact due to higher freight expenses resulting from ongoing COVID-19 supply chain challenges in addition to unfavorable sales mix, partially offset by pricing benefits.

Furthermore, Under Armour expects its earnings per share for Q1 to be between $0.02 to $0.03. According to TheFly, the consensus was $0.14.

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