Under Armour Inc (NYSE:UAA) (UA) reported its fourth-quarter earnings on Thursday, surpassing expectations for adjusted earnings per share (EPS) but delivering a revenue forecast that fell short of Wall Street estimates, sending its shares down 16%.
The sportswear company posted an adjusted EPS of $0.11 for the quarter, beating the consensus estimate of $0.08. However, revenue remained flat at $1.33 billion, aligning with projections but marking a 5% decline from the same period last year.
The drop in revenue was attributed to a 10% decrease in North America sales, which CEO Kevin Plank linked to a challenging retail environment characterized by high inventories and persistent promotions.
Under Armour (NYSE:UA)'s gross margin saw an improvement, increasing 170 basis points to 45.0% due to supply chain benefits, including lower product and freight costs. Despite these gains, the company's stock experienced a significant downturn as investors reacted to the disappointing revenue guidance for fiscal 2025.
Looking ahead, Under Armour anticipates a low-double-digit percentage rate decline in revenue, with a particularly stark 15 to 17% drop expected in North America. The company's international business is also projected to see a low-single-digit percentage decrease.
These projections are a result of efforts to reset the business and reduce promotional activities, especially in the direct-to-consumer segment, to protect the brand's strength.
For fiscal 2025, Under Armour forecasts an adjusted operating income between $130 to $150 million, considering the midpoint of anticipated restructuring charges. The expected adjusted EPS range is $0.18 to $0.21, significantly below the consensus of $0.59.
In response to the earnings report, CEO Kevin Plank stated, "We are seizing this critical moment to make proactive decisions to build a premium positioning for our brand, which will pressure our top and bottom line in the near term."
Despite the cautious outlook, Under Armour remains committed to optimizing its financial and operational efficiencies, as evidenced by the Board of Directors' approval of a restructuring plan and a share buyback program authorizing the repurchase of up to $500 million of the company's Class C common stock over the next three years.