Why Is Under Armour Stock Trading Higher Thursday?

Zinger Key Points
  • Under Armour's Q3 FY24 sales dipped 6% Y/Y to $1.49B, missing estimates slightly, but EPS surpassed expectations at $0.19.
  • Wholesale revenue declined 13% Y/Y to $712M, while direct-to-consumer revenue rose 4% to $741M in Q3 FY24.

Under Armour Inc UAA stock climbed Thursday after it reported its quarterly earnings.

The company’s third-quarter FY24 sales declined by 6% year-on-year to $1.49 billion, marginally missing the analyst consensus estimate of $1.50 billion.

The company’s Adjusted EPS was $0.19, beating the consensus estimate of $0.11.

Wholesale revenue decreased 13% Y/Y to $712 million, and direct-to-consumer revenue increased 4% to $741 million.

Apparel revenue declined 6% Y/Y, Footwear dropped 7%, while Accessories revenue was flat Y/Y. 

North America revenue decreased 12% to $915 million, and international revenue increased 7% to $566 million.

Gross profit decreased 3.9% Y/Y to $671.2 million, and the gross margin expanded 100 basis points Y/Y to 45.2%, driven primarily by supply chain benefits.

Operating margin declined 130 basis points to 4.7%, and operating income for the quarter decreased to $70 million.

The company held $1 billion in cash and equivalents as of December 31, 2023. Inventory was $1.1 billion, a 9% decline.

Outlook: Under Armour sees FY24 revenue down 3% – 4% (previously 2% – 4%) versus consensus of $5.74 billion. 

The company’s FY24 EPS outlook is $0.50 – $0.52 (prior $0.47 – $0.51) versus an estimated $0.49.

Gross margin will likely be up 120 – 130 basis points versus the previous expectation of up 100 – 125 basis points. 

Operating income forecast is $287 million – $297 million versus the previous expectation of $310 million-$330 million.

Under Armour sees FY24 capital expenditure of $210 million – $230 million (previously $230 million-$250 million).

Price Action: UAA shares are trading higher by 5.19% at $8.10 premarket on the last check Thursday.

Photo via Wikimedia Commons

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