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Under Armour’s Q4 Boosted by Growth in Overseas Sales

Under Armour Inc. has been working on improving operations, including supply chain initiatives that are expected to help boost 2019’s gross margins, and the fourth quarter’s results show those efforts are working.

For the three months ended Dec. 31, the company was in the black at $4.2 million or 1 cent a diluted share, against being in the red a year ago with a net loss of $87.9 million, or 20 cents. On an adjusted basis, earnings per share were 9 cents. Net revenues rose 1.5 percent to $1.39 billion from $1.37 billion.

Wall Street was expecting adjusted EPS of 4 cents on revenues of $1.37 billion.

“Our 2018 results demonstrate significant progress against our multi-year transformation toward becoming an even stronger brand and more operationally excellent company,” Kevin Plank, chairman and chief executive officer, said.

As for 2019, Plank said the company’s “accelerated innovation agenda, disciplined go-to-market process and powerful consumer-centric approach gives us increasingly greater confidence in our ability to deliver for Under Armour athletes, customers and shareholders.”

By region, North American sales fell 5.8 percent to $964.8 million, while those in Latin America dropped 15.1 percent to $49.2 million. Sales in the Asia-Pacific rose 35.2 percent to $167.5 million, and sales in Europe, Middle East and Africa gained 31.7 percent to $178.2 million.

By segment, apparel sales rose 2 percent to $970.4 million. Footwear slipped 4.5 percent to $235.2 million, while accessories inched down 2.2 percent to $108.3 million.

Gross margin for the quarter rose 160 basis points to 45 percent. Restructuring and impairment charges were $48 million, and the operating loss for the period was $10 million.

The company confirmed its full year 2019 outlook. That forecast calls for EPS in the range of 31 cents to 33 cents, and revenues to rise about 3 percent to 4 percent. The revenue guidance includes expectations of flat results for North America and a low double-digit percentage rate increase in the international business. The company also guided gross margin to an improvement of 60 to 80 basis points from 2018’s adjusted gross margin.

Under Armour said the improvement will be due to “channel mix benefits from lower planned sales to the off-price channel and a higher percentage of direct-to-consumer sales along with more favorable product costs due to ongoing supply chain initiatives.”