Under Armour reports 23% lower sales in Q1 as Coronavirus weighs on performance

Under Armour (NYSE: UAA) released its quarterly financial results on Monday that reported a 23% decline in sales in the first quarter. The company attributed the downbeat performance to the Coronavirus pandemic that forced it into temporarily shutting down its stores and delaying the turnaround plans.

Under Armour said that it plans on slashing its operating costs by £264 million in 2020 to cushion the economic blow from the health crisis. Some of its retail employees, the company added, may also be laid off as part of the plan.

Following the release of the earnings report, Under Armour was seen around 5% down in premarket trading on Monday.

Under Armour’s Q1 financial results versus analysts’ estimates

According to Refinitiv, analysts had anticipated the company to print £770 million in revenue in the first quarter. Their estimate for adjusted loss per share was capped at 15.4 pence. In its report on Monday, Under Armour fell short of both estimates posting £755 million in revenue in Q1 and a much broader 27.6 pence of adjusted loss per share.

Under Armour’s £478 million net loss came in significantly lower than £18.25 million profit that it recorded in the same quarter last year. Its pre-tax restructuring costs, the athletic apparel manufacturer said, will lie in the range of £385 million to £426 million in 2020. Its impairment charges and restructuring costs were worth £354 million in the recent quarter.

As compared to £970 million in the comparable quarter last year, the company’s net revenue saw a 23% decline in Q1. The company attributed a 15% of this decline to the Coronavirus pandemic.

Under Armour boasts £778 million in cash and cash equivalents

At £485 million, apparel sales were 23% down in the first quarter while revenue from footwear came in at £170 million that marked a 28% year over year decline. Accessories sales, as per the financial results, were 17% lower on an annualized basis in Q1.

The company boasted to have closed the first quarter with £778 million in cash and cash equivalents. Under Armour said it will spend roughly £81 million on capital expenditures in 2020. Originally, the company was looking at a higher £130 million of capital expenditures this year.

Other noticeable figures in Under Armour’s report on Monday include a 28% decline in wholesale revenue to £480 million in the first quarter. The company said its revenue was 28% down in North America and 12% internationally.

The £3.46 billion company is currently more than 50% down year to date in the stock market.