Under Armour (UAA) earnings report for the 3rd quarter of their 2021 fiscal year
Category: Under Armour (UAA)
Date: 8 November 2021 Stock Price of Under Armour (UAA): $24.78 Market Capital of Under Armour (UAA): $10.7 billion We take a look at the 3rd quarter earnings report of their 2021 fiscal year of Under Armour a leading manufacturer of performance athletics apparel. For the quarter the group reported revenues of $1.54 billion and net income of $113.4 million
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- Our third-quarter results were driven by strong demand for the Under Armour brand and our ability to execute quickly to meet the needs of our consumers and customers - Under Armour President and CEO Patrik Frisk."
About Under Armour
Under Armour, Inc., headquartered in Baltimore, Maryland, is a leading inventor, marketer and distributor of branded athletic performance apparel, footwear and accessories. Powered by one of the world’s largest digitally connected fitness and wellness communities, Under Armour’s innovative products and experiences are designed to help advance human performance, making all athletes better
Overview of Under Armour (UAA) 3rd quarter 2021 earnings report
- Revenue was up 8 percent to $1.5 billion (up 6 percent currency neutral) compared to the prior year.
- Wholesale revenue increased 10 percent to $911 million and direct-to-consumer revenue increased 12 percent to $604 million, driven by a strong performance in owned and operated stores offset by a 4 percent decline in eCommerce, which represented 33 percent of the total direct-to-consumer business.
- North America revenue increased 8 percent to $1.0 billion and international revenue increased 18 percent to $510 million (up 13 percent currency neutral). Within the international business, revenue increased 19 percent in Asia-Pacific (up 13 percent currency neutral), increased 15 percent in EMEA (up 11 percent currency neutral), and increased 27 percent in Latin America (up 20 percent currency neutral).
- Apparel revenue increased 14 percent to $1.1 billion. Footwear revenue increased 10 percent to $330 million. Accessories revenue decreased 13 percent to $126 million.
- Gross margin increased 310 basis points to 51.0 percent, driven by benefits from pricing and channel mix, offset by the absence of MyFitnessPal and supply chain headwinds.
- Sales, general & administrative expenses increased 8 percent to $599 million.
- Restructuring charges were $17 million.
- Operating income was $172 million. Adjusted operating income was $189 million.
- Net income was $113 million. Adjusted net income was $145 million.
- Diluted earnings per share was $0.24. Adjusted diluted earnings per share was $0.31.
- Inventory was down 21 percent to $838 million.
- Cash and Cash Equivalents were $1.3 billion at the end of the quarter, and no borrowings were outstanding under the company's $1.1 billion revolving credit facility.
Under Armour (UAA) management commentary on their 3rd quarter 2021 earnings
BALTIMORE, Nov. 2, 2021 /PRNewswire/ -- Under Armour, Inc. (NYSE: UA, UAA) today announced unaudited financial results for the third quarter ended Sept. 30, 2021.
"Our third-quarter results were driven by strong demand for the Under Armour brand and our ability to execute quickly to meet the needs of our consumers and customers," said Under Armour President and CEO Patrik Frisk. "With industry-leading innovations, increased marketing efforts to deepen our connection with Focused Performers, and consistent operational discipline – we're building greater brand affinity and are on track to deliver record revenue and earnings results in 2021."
"Our third-quarter results were driven by strong demand for the Under Armour brand and our ability to execute quickly to meet the needs of our consumers and customers," said Under Armour President and CEO Patrik Frisk. "With industry-leading innovations, increased marketing efforts to deepen our connection with Focused Performers, and consistent operational discipline – we're building greater brand affinity and are on track to deliver record revenue and earnings results in 2021."
Updated 2021 Outlook
Key points related to Under Armour's full-year 2021 outlook include:
2020 Restructuring Plan
In April 2020, Under Armour announced a $550 million to $600 million restructuring plan to rebalance its cost base to improve profitability and cash flow. The company now expects to recognize $525 million to $575 million in charges related to this plan and has recognized $500 million of pre-tax charges, including $17 million in the third quarter of 2021 or $26 million year-to-date. Of the $500 million recognized in charges, $140 million are cash-related, and $360 million are non-cash-related. The company currently expects to recognize any remaining charges related to this plan by the first calendar quarter of 2022.
COVID-19 Update
Under Armour remains focused on protecting teammate and consumer health and safety while navigating the ongoing and wide-ranging disruptions resulting from the pandemic. The company continues to work with its suppliers, partners, and customers to navigate these disruptions. However, given continued uncertainty related to COVID-19, particularly the ongoing and evolving impact on the company's suppliers and logistics providers, there could be further material impacts on Under Armour's full-year business results in 2021, as well as future periods.
Key points related to Under Armour's full-year 2021 outlook include:
- Revenue is expected to be up approximately 25 percent compared to the previous expectation of a low-twenties percentage increase, reflecting a high-twenties percentage growth rate in North America and a mid-thirties percentage growth rate in the international business.
- Gross margin is expected to increase approximately 130 basis points compared to the previous expectation of an approximate 50 to 70 basis point improvement versus the prior year adjusted gross margin of 48.6 percent with expected benefits from pricing and changes in foreign currency partially offset by the sale of the MyFitnessPal platform and expected higher freight expenses.
- Operating income is expected to reach approximately $425 million compared to the previous range of $215 million to $225 million. Excluding the impact of restructuring efforts, adjusted operating income is expected to reach approximately $475 million compared to the previous expectation of $340 million to $350 million.
- Diluted earnings per share is expected to reach approximately $0.55 compared to the previous expectation of diluted earnings per share of $0.14 to $0.16. Adjusted diluted earnings per share is expected to reach approximately $0.74 compared to the previously expected range of $0.50 to $0.52 per share.
2020 Restructuring Plan
In April 2020, Under Armour announced a $550 million to $600 million restructuring plan to rebalance its cost base to improve profitability and cash flow. The company now expects to recognize $525 million to $575 million in charges related to this plan and has recognized $500 million of pre-tax charges, including $17 million in the third quarter of 2021 or $26 million year-to-date. Of the $500 million recognized in charges, $140 million are cash-related, and $360 million are non-cash-related. The company currently expects to recognize any remaining charges related to this plan by the first calendar quarter of 2022.
COVID-19 Update
Under Armour remains focused on protecting teammate and consumer health and safety while navigating the ongoing and wide-ranging disruptions resulting from the pandemic. The company continues to work with its suppliers, partners, and customers to navigate these disruptions. However, given continued uncertainty related to COVID-19, particularly the ongoing and evolving impact on the company's suppliers and logistics providers, there could be further material impacts on Under Armour's full-year business results in 2021, as well as future periods.
Under Armour (UAA) stock price chart over the last 5 years
The image below shows the stock price history of Under Armour over the last 5 years. And its been a very miserable time for Under Armour stockholders. Over the last 5 years stockholders of Under Armour suffered a loss of -18.3%
The stock of Under Armour is trading at a lot closer to its 52 week high than it is to its 52 week low, which to us is a clear indication that the short term sentiment and momentum of Under Armour stock is positive at this point in time,
The stock of Under Armour is trading at a lot closer to its 52 week high than it is to its 52 week low, which to us is a clear indication that the short term sentiment and momentum of Under Armour stock is positive at this point in time,
Under Armour (UAA) stock valuation
So what do we value Under Armour stock at after the release of their latest earnings report? Based on Under Armour earnings report our valuation models provides a target price (full value price) for Under Armour at $26.10 a stock. We therefore believe that the stock of Under Armour is clsoe to being fully valued.
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $26.10 therefore we believe a good entry point into Under Armour stock is at $23.50 or below.
Since Under Armour is trading at close to our suggested entry price we rate the stock of Under Armour as a HOLD
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $26.10 therefore we believe a good entry point into Under Armour stock is at $23.50 or below.
Since Under Armour is trading at close to our suggested entry price we rate the stock of Under Armour as a HOLD
Next earnings release of Under Armour
It is expected that Under Armour will publish their 4th quarter 2021 earnings report in late February 2021