Under Armour beat sales and profit estimates for the second quarter, signaling that its turnaround plan is working, the Baltimore-based athletic apparel brand said Tuesday.
With progress over last year and 2019, the sports apparel maker raised its full-year revenue outlook and said it expects a “solid” performance this year.
“With the critical mass of our transformation behind us and the continued improvements across product, marketing, and our financial results, I believe this year sets a robust foundation that positions us well for our next chapter of profitable growth,” said Patrik Frisk, Under Armour’s president and CEO, in Tuesday’s announcement.
The athletic apparel and footwear retailer has been trying to regain its cachet as a premium brand that consumers will buy at full price online or in branded stores, as opposed to marked down at discounters.
Under Armour swung to a profit of $59.2 million, or 13 cents per share, in the April-to-June period after reporting a loss of $183 million, or a loss of 40 cents per share, in the second quarter of 2020. The company earned 24 cents per share on an adjusted basis, beating analyst’s expectations of 6 cents per share.
Revenue rose 91% to $1.4 billion in the three months that ended June 30, compared with revenue of $707.6 million in the coronavirus pandemic-decimated second quarter of 2020, the company reported. Wall Street expected revenue of $1.21 billion.
Shares of Under Armour rose 7.5% in Tuesday trading to $22.70 each.
The company said it expects revenue to increase this year at a low twenties percentage rate compared with the previous expectation of a rate in the high teens.
It’s not surprising that the company has rebounded strongly from a 41% collapse in revenue in the second quarter of 2020, as pandemic restrictions have lifted, said Neil Saunders, managing director of GlobalData. But sales growth of 91% shows “impressive momentum,” and puts Under Armour up 13% in sales over the same period in 2019, Saunders said Tuesday in a report.
The momentum holds true across apparel, footwear and accessories, meaning “Under Armour’s swift recovery is broadly based,” Saunders said.
“The question now, of course, is how sustainable this recovery is,” Saunders said. “There is no doubting the strength of the second-quarter numbers, but they are also underpinned by some exceptional factors that may not persist as we move through the remainder of this year.”
For one, consumers may pull back from the recent rush out to buy new apparel, including athletic garb, as society has opened back up.
“Before the pandemic, the issue for Under Armour was a lack of brand clarity — something that was unhelpful in a market where competitors from Nike to Lululemon had much more focus,” Saunders said.
Under Armour is moving in the right direction with a push toward selling online and in branded stores and more focus on specific activities such as running, he said.
But, he said, “the real acid test will come when the trading environment normalizes.”