Under Armour, Inc. UAA reported third-quarter fiscal 2025 results, wherein revenues and earnings exceeded the Zacks Consensus Estimate. However, the top and bottom lines decreased year over year.
The results highlight the impact of a refined brand focus, strengthened by an updated product strategy, enhanced marketplace discipline and a shift to a category-led operating model. The strong performance prompted management to raise the fiscal 2025 outlook.
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Under Armour, Inc. Price, Consensus and EPS Surprise
Under Armour, Inc. price-consensus-eps-surprise-chart | Under Armour, Inc. Quote
Under Armour’s Quarterly Performance: Key Insights
The Baltimore, MD-based company reported adjusted earnings of 8 cents a share, which beat the Zacks Consensus Estimate of 3 cents. The reported figure decreased from 19 cents a share in the year-ago period.
Meanwhile, net revenues of $1,401 million beat the Zacks Consensus Estimate of $1,338 million but decreased 5.7% from the prior-year quarter. The metric declined 6% on a currency-neutral basis.
Wholesale revenues fell 1% year over year to $704.8 million, while direct-to-consumer revenues declined 9.1% to $672.9 million. Revenues from company-owned and operated stores dipped 1%, whereas e-commerce revenue dropped 20% due to planned reductions in promotional activities. E-commerce accounted for 39% of the total direct-to-consumer business for the quarter.
Breaking Down Under Armour’s Top Line
By product category, Apparel revenues declined 5% year over year to $966.1 million, beating the Zacks Consensus Estimate of $909.2 million. Footwear revenues decreased 9% to $301.2 million, lagging the consensus estimate of $303.6 million. Revenues from the Accessories category rose 5.7% to $110.4 million, outperforming the consensus estimate of $98 million. Meanwhile, Licensing revenues dropped 17.8% to $23.9 million, falling short of the consensus estimate of $45.3 million.
Revenues from North America declined 7.8% to $843.6 million, exceeding the Zacks Consensus Estimate of $790.7 million. Meanwhile, revenues from the international business decreased 1.4% (down 2% on a currency-neutral basis) to $558 million.
Within the international segment, revenues from Europe, the Middle East and Africa ("EMEA") increased 4.9% year over year to $297.9 million, beating the consensus estimate of $289.5 million. Revenues from the Asia-Pacific dropped 5.1% to $201.1 million, surpassing the consensus estimate of $195.5 million. Latin America saw a 15.5% decline to $59 million, lagging the consensus estimate of $68.4 million.
Focus on UAA’s Margins
Under Armour reported gross profit of $665.2 million, down 0.8% year over year. The company’s gross margin expanded 240 basis points to 47.5% from the prior-year period. This was driven by reduced direct-to-consumer discounting, lower product and freight costs and favorable foreign currency fluctuations.
Adjusted selling, general, and administrative expenses increased 5% year over year to $605.5 million, led by higher marketing expenses. Adjusted operating income came in at $59.6 million, down from $92 million in the year-ago period.
Under Armour Financial Snapshot
UAA ended the quarter with cash and cash equivalents of $726.9 million, long-term debt (net of current maturities) of $595.2 million, and total stockholders' equity of $1.98 billion. For fiscal 2025, management expects capital expenditure between $170 million and $180 million.
In the fiscal third quarter, Under Armour repurchased $25 million worth of its class C common stock, retiring 2.8 million shares. As of Dec. 31, 2024, 8.7 million shares were repurchased for $65 million as part of a three-year, $500-million program approved by the company in May 2024.
UAA Stock Past Three-Month Performance
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Sneak Peek Into UAA’s FY25 Outlook
Under Armour's fiscal 2025 outlook has been updated with several key adjustments. Revenues are expected to decline 10%, an improvement from the previous forecast of a low-double-digit percentage decline. This includes an anticipated 12-13% drop in North America compared with the prior mentioned 14-16% decline, and a mid-single-digit decrease in international sales versus the earlier mentioned low-single-digit decline.
Within the international business, EMEA is expected to remain flat, while the Asia-Pacific region is projected to see a low-teen percent decline, an adjustment from the previous forecast of a high-single-digit drop. The gross margin is expected to improve 160 basis points compared with the prior mentioned 125-150 basis points, driven primarily by reduced direct-to-consumer discounting, and lower product and freight costs.
Selling, general and administrative expenses are anticipated to rise at a high-single-digit percentage rate due to litigation settlement expenses. However, when excluding litigation-related costs, related insurance recoveries, anticipated transformation expenses, and impairment charges, adjusted SG&A expenses are projected to decline at a low-single-digit percentage rate. This decline compares with the previously expected low-to-mid single-digit decrease.
The operating loss is projected at $179-$189 million compared with the prior mentioned $176-$196 million. Adjusted operating income is expected between $185 million and $195 million, an increase from the previously mentioned $165-$185 million, excluding the mid-point of anticipated restructuring charges and transformation expenses, litigation settlement expenses and related insurance recoveries, and impairment charges.
Loss per share is expected between 48 cents and 50 cents, a slight adjustment from the prior mentioned 48-51 cents. Adjusted earnings per share are forecast between 28 cents and 30 cents, up from the earlier mentioned 24-27 cents.
This Zacks Rank #3 (Hold) stock has declined 21.5% in the past three months against the industry’s rise of 12.1%.
Key Picks
Some better-ranked stocks are Urban Outfitters Inc. URBN, Genesco Inc. GCO and Deckers Outdoor Corporation DECK.
Urban Outfitters is a lifestyle specialty retailer that offers fashion apparel and accessories, footwear, home décor and gift products. The company flaunts a Zacks Rank of (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Urban Outfitters’ fiscal 2025 earnings and revenues indicates growth of 20.6% and 7.5%, respectively, from the fiscal 2024 reported levels. URBN delivered a trailing four-quarter average earnings surprise of 22.8%.
Genesco is a specialty retail and branded company selling footwear and accessories in retail stores. It currently sports a Zacks Rank #1.
The Zacks Consensus Estimate for Genesco’s fiscal 2025 earnings and revenues indicates growth of 67.9% and 1.5%, respectively, from the fiscal 2024 reported figures. GCO delivered a trailing four-quarter average earnings surprise of 36.9%.
Deckers is a leading designer, producer and brand manager of innovative, niche footwear and accessories. It flaunts a Zacks Rank of 1 at present.
The Zacks Consensus Estimate for DECK’s fiscal 2025 earnings and revenues implies growth of 20% and 15.3%, respectively, from the year-ago actuals. DECK delivered a trailing four-quarter average earnings surprise of 36.8%.
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