Under Armour (UA) said it is on track to meet its 2018 outlook, but momentum for the Baltimore-based brand is coming from overseas, where it expects sales to grow more than 25 percent this year.
In a Nutshell: Under Armour beat Wall Street expectations in the first quarter, but the No. 4 performance apparel and footwear company continues to search for its identity on its home turf. Its North American sales were down 1 percent currency neutral, while international business increased 27 percent—representing 24 percent of total revenue for the quarter.
Sales: Revenue for Q1 increased 6 percent to $1.2 billion. Though the company’s North America sales remained relatively flat, within its global business, Asia-Pacific proved to be the biggest boon, with revenue increasing 35 percent. Revenue in EMEA (Europe, Middle East and Asia) was up 23 percent, and Latin America saw a 21 percent jump.
Direct-to-consumer sales, which increased 17 percent to $352 million, contributed 30 percent of the brand’s global revenue in the quarter. Revenue to wholesale customers increased 1 percent to $779 million.
Apparel sales increased 7 percent to $766 million, driven mainly by the men’s training category. Footwear, however, continues to be a sore spot for the brand as it fails to connect with sneaker-obsessed male teens, with sales increasing just 1 percent during the quarter.
Earnings: Under Armour notched a net loss of $30 million. Excluding the impact of the company’s 2018 restructuring plan, adjusted net income was $1 million. Restructuring costs were $37 million.
CEO’s Take: “Our first quarter results demonstrate measured progress against our focus on operational excellence and becoming a better company,” Under Armour chairman and CEO Kevin Plank said. “As we continue to build our global brand by delivering innovative performance products to our athletes, amplifying our story, further strengthening our go-to-market process, and leveraging our systems to create even deeper consumer connections—we remain confident in our ability to deliver on our full year targets.”