American multinational clothing store Under Armor seen in Hong Kong.
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Under armour on Wednesday cut its profit forecast for fiscal year 2023 as more promotions on its sportswear have eaten into profits.
The company now expects full-year earnings per share to be between 61 cents and 67 cents, down from its previous guidance of 79 cents to 84 cents. Gross margins are expected to decline by 375 to 425 basis points, a worse outlook than the previous 150-200 basis point range. The basis point is 0.01 percentage points.
However, Under Armor’s first-quarter financial results were in line with analyst expectations.
Here’s what the company reported versus what Wall Street was expecting, based on a survey of analysts by Refinitiv:
- Earnings per share: 3 cents, adjusted, vs. 3 cents expected
- Turnover: $1.35 billion vs. $1.34 billion expected
The company said revenue was driven in part by higher prices. North American revenue for the period was flat from last year at $909 million, while international revenue fell 3.3% to $431 million, resulting in an 8% decline in the Asia-Pacific region. Positive. On a currency-neutral basis, international sales rose 1.5%.
Gross profit margin for the period decreased by 280 basis points compared to the previous year.
Cost of goods sold increased from the same period in 2021 to USD 718.9 million, accounting for 53.3% of net revenue compared to 50.5% of net sales last year.
Chief Financial Officer David Bergman said on an earnings call that the company is “not excited about getting more promotional” but defended the price cuts due to the inflationary environment.
Net income before adjustment was $7.68 million, or 2 cents per share.
Under Armor reported $10 million in legal costs related to ongoing litigation. Last week, the company agree to settle a lawsuit with UCLA for $67.49 million for a terminated apparel contract.
The company said it expects litigation costs to continue to weigh on profits, citing a 2% negative impact on EPS for the full year.
Kevin Plank, founder and executive chairman of Under Armor, said Wednesday that the company will choose a new CEO “later this year.” Interim CEO Colin Browne has held this role since Patrick Frisk resigns June 1.
