The interior of the Under Armor store is seen on November 3, 2021 in Houston, Texas.
Brandon Bell | Getty Images
under the shield He sees a tough year ahead, fraught with global supply chain challenges and another round of Covid shutdowns in China eroding demand.
The athletic footwear and apparel maker on Friday released a disappointing outlook for the 2023 fiscal year, after reporting an unexpected loss for the three months ending March 31 and sales that missed Wall Street estimates.
The news sent investors fleeing, as shares of Under Armor tumbled more than 17% in pre-market trading.
Also on Friday, rival Adidas said its growth in 2022 will come at the lower end of the expected range due to the “heavy impact” of the coronavirus-related lockdowns in China. Adidas is now seeing a significant drop in its sales in the Greater China region this year.
Here’s what Under Armor did in the three months ending March 31, compared to what Wall Street was expecting, based on a Refinitiv poll of analysts:
- share loss: 1 cent adjusted against expected 6 cent profit
- Revenues: $1.3 billion vs. $1.32 billion projected
Under Armor reported a net loss for the quarter of $59.6 million, or 13 cents a share, compared to net income of $77.8 million, or 17 cents a share, a year earlier.
Excluding non-recurring items, he lost 1 penny per share. Analysts were looking for adjusted earnings per share of 6 cents.
Sales grew to $1.3 billion from $1.26 billion in the previous year. That missed estimates of $1.32 billion.
In North America, sales grew 4% to $841 million. However, its international business grew by just 1%, to $456 million, impacted by a 14% decline in the Asia Pacific region, including China.
China is not only a growing market for Under Armor trying to win new customers, it is also a major manufacturing center for much of the sportswear industry. A number of international companies, including apple And Estee LauderYou have They have warned in recent days that the burden of China’s Covid controls will hit their businesses.
In the twelve months ending December 31, Under Armor produced approximately 67% of its apparel and accessories in China, Vietnam, Jordan, Malaysia and Cambodia. And all of its shoes are made in China, Vietnam, and Indonesia, and it’s an annual record show.
For fiscal year 2023, Under Armor is expected to earn between 63 cents and 68 cents per share on an adjusted basis, which is lower than analysts’ expectations of 86 cents.
She sees sales growth of 5% to 7% over the previous year. Analysts were looking for a 5.4% increase.
Under Armor said the forecast takes into account three percentage points of headwinds due to its decision to cancel some orders for sellers due to capacity issues and supply chain delays.
Armor’s fiscal year runs from April 1 through March 31 of next year.
CEO Patrick Friske said the brand should return to providing “sustainable and profitable returns” as global supply challenges and emerging Covid-19 impacts in China return to normal.
Look for the full financial release from Under Armor here.
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