- Under Armour reported second-quarter 2019 earnings Tuesday that saw the company lose less money than expected, but also miss revenue forecasts.
- The company also made a downward adjustment to its full year 2019 outlook, saying that it expects sales to decline slightly in North America.
- Shares of the sports retailer fell more than 13% in early trading on the news.
- Watch Under Armour trade live on Markets Insider.
Under Armour delivered second-quarter earnings Tuesday that beat expectations on loss-per-share but slightly missed expected revenue. The report was disappoinintg following a surprisingly strong first quarter.
The company also updated its full-year guidance, saying that it now expects a slight decrease in sales in North America, as opposed to previous expectations of a “relatively flat” 2019. Under Armour still expects international sales to grow by 3% to 4%.
Shares fell more than 13% early Tuesday on the news.
Here’s what the company reported versus what analysts polled by Bloomberg expected:
Adjusted loss-per-share: $US0.04 reported versus $US0.05 (expected)
Net revenue:$US1.19 billion reported versus $US1.20 billion (expected)
Under Armour has struggled to keep up with other sports retailers in the US, lagging Lululemon and Nike. Heavy discounting has also weighed on the retailer, which has lowered prices in an attempt to sell extra merchandise at stores such as Dick’s Sporting Goods. This kind of discounting can eat away at profits.
“By staying sharply focused on our long-term strategies – driving our premium athletic brand positioning through industry leading innovation, geographic expansion and creating deep connections with our consumers – we are on track to deliver against our expectations in 2019,” said CEO Kevin Plank in a statement.
A 3% decline in North American revenue weighed down a 6% jump in Europe and a 23% increase in Asia. While growth abroad is positive, it does little to counteract Under Armour’s slump in the US, as international business makes up only 28% of total revenue.
Apparel was also a drag – revenue decreased 1.1% and pulled down positive sales of footwear, which increased 5% in the second quarter. Accessories revenue was flat.
The company decreased its inventory by 26% in the second quarter, after a shift in sportswear trends left the company with lots of unsold inventory that dragged its performance in 2018. The shift in trends from high-endurance performance wear to athleisure has also been a problem for Under Armour-data show that teens aren’t flocking to the brand, and the stores lack the flash of competitors like Nike and Adidas.
The earnings release also comes in the middle of a transformation. Shares of the company jumped as much as 4% in the first-quarter on positives signs that the changes implemented were working.
Shares of Under Armour have gained roughly 50% year-to-date.
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