Under Armour picks up momentum overseas but weaknesses persist in US

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Under Armour on Tuesday reported stronger-than-expected sales for the first quarter, boosted by the retailer’s international business and growth within the apparel category. Still, weaknesses persist in the U.S., where rivals Nike and Adidas have stolen market share.

Under Armour’s share price had climbed more than 4 percent in premarket trading but then fell into negative territory.

Here’s how the company performed for the period ended March 31:

  • Earnings: 0 cents per share, adjusted, vs. a loss of 5 cents per share expected in a Thomson Reuters survey of analysts
  • Revenue: $1.2 billion vs. $1.12 billion expected by Thomson Reuters

Under Armour’s net loss widened to $30.2 million, or 7 cents a share, compared with $2.3 million, or a penny per share, one year ago. The company said it had restructuring costs of $37.5 million during the quarter.

Excluding one-time items, Under Armour broke even for the quarter on a per-share basis, which was better than the 5 cent loss expected by analysts.

Under Armour’s sales climbed 6 percent to $1.19 billion from $1.12 billion a year ago, again topping analysts’ expectations. Sales in North America fell 0.4 percent, while those in international markets climbed 27 percent, now representing 24 percent of Under Armour’s total sales.

Apparel sales jumped 7 percent, driven by strength in men’s training, Under Armour said. Footwear sales were up 1 percent, while accessories sales grew 3 percent during the quarter.

CEO Kevin Plank said Tuesday the company is “confident” it will meet full-year targets announced back in February. The retailer is expecting sales to increase at a low single-digit percentage rate, fueled by growth outside the U.S. of more than 25 percent.

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Rebounding from a rough ride in 2017, where shares tumbled 50 percent, Under Armour has convinced investors its turnaround plans are working. The stock has gained back more than 20 percent so far this year.

“The company has an opportunity to build off a bottom,” Jefferies analyst Randal Konik said in a note to clients last week. “We continue to believe UA is one of 3 brands that matter in athletic.”

Konik said the company still needs to “fix” its wholesale model, which has been a particularly strong issue in North America, where Adidas has picked up in popularity and taken shelf space from Nike and others.

However, Konik pointed to Under Armour’s direct-to-consumer business as a momentum driver, and the brand continues to pick up customers overseas.

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