Under Armour cites excessive competition and Coronavirus for the dovish outlook for fiscal 2020
- Under Armour cites excessive competition and Coronavirus for the dovish outlook for fiscal 2020.
- Under Armour generated $1.44 billion in revenue in Q4 versus analysts' estimate of $1.47 billion.
- Under Armour made 10 cents of earnings per share in line with the analysts' estimate for Q4.
Under Armour said on Tuesday that it is facing fierce competition from rivals Lululemon and Nike. Owing to reduced demand for its training sneakers and sweat-shirts, the company said its sales are expected to see a decline in fiscal 2020.
The company cited the recent outbreak of Coronavirus in China to play a role in reduced sales in 2020’s first quarter that could amount to around $60 million. Under Armour currently has over 600 stores in mainland China. Following the downbeat earnings report, Under Armour’s shares were seen trading 17% lower on Tuesday.
Under Armour’s Figures Versus Analysts’ Estimates
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In the fourth quarter that ended on December 31st, analysts were expecting the company to generate $1.47 billion in revenue. In terms of earnings per share, they had anticipated 10 cents in the recent quarter. In its quarterly performance results announced on Tuesday, Under Armour announced to have generated a lower $1.44 billion in revenue while its EPS (earnings per share) was recorded in line with the estimate of 10 cents per share.
The athletic apparel maker posted over 20% of quarterly growth in revenue for two decades. 2017 marked its first quarterly loss in over 20 years. Ever since the company has struggled to catch back its pace on the revenue’s front. While it kept its focus primarily on performance, competitors like Adidas, Lululemon, and Nike resorted to fashionable workout gear to improve sales via attracting younger consumers in the United States.
Under Armour has also stuck with retailers like Kohl’s for sales so far while the competitors are focusing increasingly on direct sales.
The company also announced its plans for restructuring on Tuesday. Restructuring, according to Under Armour, includes not opening its flagship New York City location. Under Armour is expected to face $325 million to $425 million in pretax charges in fiscal 2020 ascribed to restructuring. $225 million to $250 million of this cost is likely to be attributed to not opening its flagship store.
Other Noticeable Figures In Under Armour’s Earnings Report
Other noticeable figures in Under Armour’s earnings report on Tuesday include $15.3 million of net loss versus $4.2 million of net income that it printed in the same quarter last year. The quarterly revenue of $1.44 billion was higher than last year’s $1.39 billion.
On the sales front, North America registered a 1.9% growth while a massive 9.8% was noted in Asia-Pacific. Global apparel sales increased by 0.2% in the recent quarter while footwear posted a 10.3% improvement. Lastly, a 1.6% growth in accessories sales was highlighted in the quarterly performance results.