Under Armour : Earnings Review and Free Research Report: Under Armour’s Revenue Grew 9%; Net Loss Narrowed
Research Desk Line-up: Xcel Brands Post Earnings Coverage
LONDON, UK / ACCESSWIRE / August 17, 2017 / Pro-Trader Daily has just published a free post-earnings coverage on Under Armour, Inc. (NYSE: UA), which can be viewed by registering at http://protraderdaily.com/optin/?symbol=UA, following the Company's announcement of its second quarter fiscal 2017 operating results on August 01, 2017. The sports apparel Company outperformed top- and bottom-line expectations and also announced a restructuring plan. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member's account at:
Get more of our free earnings reports coverage from other constituents of the Textile - Apparel Clothing industry. Pro-TD has currently selected Xcel Brands, Inc. (NASDAQ: XELB) for due-diligence and potential coverage as the Company announced on August 09, 2017, its financial results for Q2 2017 which ended on June 30, 2017. Register for a free membership today, and be among the early birds that get access to our report on Xcel Brands when we publish it.
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For the quarter ended June 30, 2017, Under Armour reported revenue of $1.09 billion, up 9% compared to revenue of $1.00 billion in Q2 2016. The Company's revenue numbers exceeded analysts' expectations of $1.08 billion.
For Q2 2017, Under Armour's gross margin declined 190 basis points to 45.8% as benefits from channel and product mix were offset by inventory management initiatives; changes in foreign currency rates; and higher air freight in connection with the Company's enterprise resource planning (ERP) system implementation, which impacted the timing of shipments to certain key customers. These headwinds were partially offset by channel and product mix, which included a lower composition of liquidations.
The Company's selling, general, and administrative expenses (SG&A) increased 10% to $503 million, or 46.2% of revenue, due to continued investments in the direct-to-consumer, footwear, and international businesses.
For Q2 2017, Under Armour's net loss narrowed down to $12.31 million, or $0.03 per diluted share, compared to a net loss of $52.66 million, or $0.12 per diluted share, in Q2 2016. The Company's results were better than Wall Street's estimates for a loss of $0.06 per share.
During Q2 2017, Under Armour's apparel revenue increased 11% to $681 million, driven by strength in men's training, women's training, and golf. The Company's revenue from the footwear business declined 2% to $237 million. Under Armour's revenue from accessories surged 22% to $123 million in the reported quarter, with solid results from men's training, women's training, and youth performance.
Bifurcating revenue by Channel, Under Armour's wholesale business grew 3% to $655 million in Q2 2017, reflecting strength in international, and partially offset by an uneven North American business. The Company's direct-to-consumer revenue grew 20% to $386 million, with growth in all 3 key concepts: Factory, Brand House and Ecommerce, and growth spread across the globe. Under Armour's licensing business grew 20% to $25 million in Q2 2017, driven primarily by strength in the Company's sock business.
Under Armour's North American business generated revenue of $829.81 million, up 0.3% compared to revenue of $827.13 million in Q2 2016. The Company's international business delivered strong top-line results, posting a 57% increase in revenue to reach $235 million, or 22% of total revenue in the reported quarter. In the international geographies, Europe, the Middle-East, and Africa (EMEA)'s revenue surged 57% to $103.90 million, driven by balanced growth across wholesale and DTC. Under Armour's Asia/Pacific revenue rocketed 89% to $93.57 million, driven by strength in China, Taiwan, and Korea. The Company's Latin American business grew 10% to $38.00 million, led by strong growth in its DTC channel.
In the earnings release, Under Armour announced that its Board of Directors had approved a restructuring plan to more closely align its financial resources to support the Company's efforts to better serve the evolving needs of the changing consumer and customer landscape.
In conjunction with this plan, Under Armour expects to incur total estimated pre-tax restructuring and related charges of approximately $110 million - 130 million in the fiscal year 2017, including approximately up to $70 million in cash related charges, consisting of $25 million in facility and lease terminations, $15 million in employee severance and benefits costs, and $30 million in contract termination and other restructuring charges; and, up to $60 million in non-cash charges comprised of approximately $20 million of inventory related charges, and approximately $40 million of intangibles and other asset related impairments.
At the end of Q2 2017, Under Armour's cash and cash equivalents was up 37% to $166 million while inventory grew 8% to $1.2 billion; closely in-line with revenue growth. The Company's accounts receivable was up 31% and capital expenditure was down 45% to $82 million.
Fiscal Year 2017 Outlook
For FY17, Under Armour is forecasting net revenues to grow in the range of 9% to 11% versus the previous expectations of 11% to 12% growth; reflecting moderation in the Company's North American business.
Gross margin, on a reported basis, is expected to be down approximately 160 basis points compared to 46.4% in 2016. On a reported basis, operating income is expected to reach approximately $160 million - 180 million. Excluding the impact of the restructuring plan, adjusted operating income is expected to be approximately $280 million to $300 million.
On a reported basis, full year diluted earnings per share are projected to be in the band of $0.18 to $0.21. Excluding the impact of the restructuring plan, FY17 adjusted diluted earnings per share is expected to reach $0.37 - $0.40.
At the close of trading session on Wednesday, August 16, 2017, Under Armour's stock price marginally rose 0.12% to end the day at $16.68. A total volume of 2.56 million shares were exchanged during the session. The Company's shares are trading at a PE ratio of 42.12.
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