TLDR
- Under Armour forecasts annual revenue to decline 4-5%, worse than Wall Street’s 4% estimate, with profit guidance of $0.03-$0.05 per share below the $0.06 consensus
- David Bergman stepped down as CFO and will be replaced by Reza Taleghani, currently CFO of Samsonite
- Q3 revenue fell 5% to $1.33 billion but beat estimates of $1.31 billion, while earnings of $0.04 per share topped the $0.02 forecast
- The company expects $100 million in tariff-related costs this year, with 30% of merchandise sourced from Vietnam facing 20-40% duties
- UAA shares have dropped 44% year-to-date and nearly 60% over the past 12 months
Under Armour reported third-quarter earnings that beat Wall Street forecasts but delivered a gloomy outlook for the rest of the year. The sportswear company announced revenue of $1.33 billion for Q3, down 5% from last year.
The figure came in slightly above analyst estimates of $1.31 billion. Earnings per share of $0.04 also topped expectations of $0.02.
But the good news stops there. The company forecast full-year revenue will drop 4-5%, worse than the 4% decline analysts predicted.
Profit guidance also disappointed. Under Armour expects to earn $0.03 to $0.05 per share this year, below the $0.06 consensus estimate.
The company also projects current-quarter revenue to fall 6-7%. Analysts had been expecting a smaller 4.1% decline.
Shares fell about 2% in early trading following the announcement. The stock has already lost 44% of its value this year and nearly 60% over the past 12 months.
Leadership Shake-Up
The company announced David Bergman is stepping down as CFO. He will be replaced by Reza Taleghani, who currently serves as CFO of Samsonite, the parent company of American Tourister.
The change comes 18 months into a turnaround effort led by founder Kevin Plank. Plank returned as CEO in March after the company saw sales decline for two consecutive years.
But the turnaround has hit some roadblocks. One analyst said Under Armour appears to be struggling with both external pressures and internal problems.
Tariff Troubles
Tariffs are taking a bite out of Under Armour’s bottom line. The company sources roughly 30% of its merchandise from Vietnam.
That exposure makes it vulnerable to new tariffs. Trump administration policies include a 20% tariff on Vietnamese goods and a 40% duty on items trans-shipped through Vietnam.
Under Armour said in August it expects $100 million in tariff-related costs this year. That’s a hefty bill for a company already dealing with weak consumer spending.
The combination of higher costs and cautious shoppers has created a tough environment. Consumers are pulling back on discretionary purchases as prices rise across the board.
The company hadn’t issued an annual forecast since May. The delayed guidance reflects the uncertainty Under Armour faces in planning ahead.
The stock has a consensus Hold rating from 20 Wall Street analysts. Three recommend buying, 14 say hold, and three advise selling.
The average price target sits at $5.65, which would represent 27% upside from current levels. Those ratings may shift after analysts digest the latest results.
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