- Under Armour‘s (UAA) shares rose 10% to $8.86 after it outperformed Q3 expectations and raised its fiscal year 2025 profit forecast, driven by reduced discounting and demand recovery in North America and Asia.
- The company reported a 5.7% year-over-year revenue decline to $1.4 billion but beat earnings per share by $0.04, with gross margins improving by 240 basis points to 47.5% due to less discounting and lower costs.
- Under Armour revised its FY25 guidance upwards, now expecting EPS of $0.28 – $0.30 and a revenue decrease of about 10%, focusing on full-price sales and marketing to boost brand appeal amid competitive pressures.
Under Armour (UAA), with a market cap of $3.38 billion, saw its shares surge approximately 10% to $8.86 in premarket trading on Thursday, driven by an upward revision of its annual profit forecast after surpassing third-quarter expectations. The athletic wear company, based in Baltimore, Maryland, benefited from a strategic pivot towards less discounting and a noticeable uptick in demand in North America and Asia, contributing to a robust holiday sales period. This shift not only improved its gross margin by 240 basis points to 47.5%, due to lower product and freight costs alongside a favorable currency impact, but also reflected a broader industry trend towards recovery in consumer demand for sportswear in key markets like China.
Despite a 5.7% year-over-year revenue decline to $1.4 billion in Q3 FY 2025, Under Armour outperformed expectations, beating both revenue and earnings forecasts. EPS came in at $0.08, surpassing consensus estimates by 4 cents. North America saw an 8% revenue decline to $844 million, while internationally, revenue dipped by 1% to $558 million, with mixed results across regions: EMEA (Europe, the Middle East, and Africa) increased by 5%, Asia-Pacific decreased by 5%, and Latin America fell by 16%. These figures underscore the challenges and opportunities in global markets but highlight the effectiveness of Under Armour’s strategy to maintain full-price sales, as advocated by its founder and CEO, Kevin Plank.
Looking forward, Under Armour has raised its guidance for fiscal year 2025, now expecting earnings per share to range between $0.28 and $0.30, up from the previous $0.24 to $0.27, and slightly above the consensus. Revenue projections have been adjusted to a decrease of about 10%, translating to approximately $5.13 billion, suggesting cautious optimism. This adjustment comes amidst increased marketing investments aimed at enhancing brand visibility and appealing to a younger demographic, amidst fierce competition. The company’s strategic moves, including reducing discounts to bolster margins, have evidently paid off, positioning Under Armour to navigate through both domestic and international market complexities with a clearer path towards profitability and brand rejuvenation.
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