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Bloomberg
Under Armour delivered first-quarter earnings that topped analysts’ estimates, another indication that its three-year transformation is getting the athletic brand back on track.
Earnings amounted to 5 cents a share, Under Armour said, compared with estimates of break-even. Sales were $1.2 billion, just a slight gain from a year earlier, but above the projected $1.18 billion. Shares jumped in premarket trading.
The slow sales growth (and 2.8 percent dip in North American sales) was intentional, part a dramatic shift in Under Armour’s business over the past two years. The company wrote down a large chunk of inventory, reworked its supply chain and eliminated about 40 percent of its products to focus on its highest-selling lines.
Gross margin expanded for the third consecutive quarter, an indication that the company is becoming more efficient and that those changes are helping it sell more items at full price. Inventory also declined dramatically, in line with founder Kevin Plank’s strategy to create a more streamlined operation. Under Armour’s $875 million in inventory was its lowest level in three years. The focus for Under Armour now shifts to growth later in the year, especially in its all-important domestic market.
The company kept its full-year revenue growth projections in the 3 percent to 4 percent range, but boosted its full-year earnings forecast.