Under Armour Inc. (NYSE: UAA) missed analysts’ expectations on both revenue and earnings for the fourth quarter of 2019, sending the stock crashing 14% in premarket hours on Tuesday.
Total revenue of $1.44 billion rose 4% from the same period last year but fell slightly below estimates of $1.46 billion. On a currency-neutral basis, revenues grew 4%.
The company reported a net loss of $15 million, or $0.03 per
share, compared to a net income of $4.2 million, or $0.01 per share, last year.
The results were impacted by a $23 million tax expense, and a $39 million impairment
charge associated with its Japan licensee. Analysts had forecast EPS of $0.10.
Under Armour’s transformation strategies have helped in improving
inventory management and strengthening the balance sheet but the company
continued to face demand headwinds during the quarter. The retailer is looking
to prioritize its investments in order to drive long-term profitable growth.
Pricing, coupled with channel mix and supply chain initiatives, helped drive a 230 basis point improvement in gross margin to 47.3%. Inventory decreased 12% to $892 million.
For fiscal year 2020, revenue is expected to be down at a
low single digit percent versus 2019. The company expects a mid to high single
digit percentage decline in North America and a low double-digit percent growth
in the international business. FY20 EPS is expected to be $0.10 to $0.13.
The initial 2020 outlook includes a negative impact from the
coronavirus outbreak in China of approx. $50-60 million in sales related to the
first quarter of 2020.
Under Armour is planning on undertaking a restructuring initiative in 2020 in order to improve profitability and cash flow generation and is currently reviewing the same. The company currently estimates it will incur $325-425 million in pretax charges for the year. Under Armour also expects to realize around $30-50 million in pretax benefits.
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