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Under Armour revenue beats estimates, short bets squeezed

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02/13/2018 | 06:11pm CEST
An Under Armour sign is seen outside a store in Chicago

(Reuters) - Under Armour Inc  (>> Under Armour) beat estimates for fourth-quarter revenue on Tuesday, sending shares up nearly 19 percent as strong international sales alleviated a bad run of results.

(Reuters) - Under Armour Inc <UA.N> (>> Under Armour) beat estimates for fourth-quarter revenue on Tuesday, sending shares up nearly 19 percent as strong international sales alleviated a bad run of results.

Some analysts put the scale of the move down to a squeeze on negative "short" bets against the company that have made it the most betted-against stock on the S&P 500, also saying forecasts for 2018 were not as bad as some on Wall Street had feared.

The company still racked up another quarterly loss, largely from restructuring costs and a tax charge. Eliminating those items it broke even, in line with expectations, according to Thomson Reuters I/B/E/S.

"While investors may cheer the modest upside on Under Armour's top line and 2018 guidance that looks pragmatic, the fourth quarter provides a stark reminder that the company has a long road ahead of it," William Blair analyst Sharon Zackfia said in a note.

The company has been trying to transform its business in a fiercely competitive U.S. sportswear market that has seen prices sink, retail sports stores go bankrupt and its own sales growth drop sharply.

Management embarked on a plan last year to cut jobs and close stores and focus on selling directly to consumers through its online and own-brand stores, also signing models Kendall Jenner and Bella Hadid in a major marketing push.

The company also launched HOVR, a bluetooth connected performance running shoe earlier this year, which it said would be backed by the "largest, most comprehensive (marketing) campaign" in Under Armour history.

It said 2018's performance initially would be similar to 2017 as strength in its online business would be offset by its contraction from the wholesale department store market.

In the current quarter sales are expected to be flat, while revenue in North America, its biggest market, are expected to decline in the mid-single-digit percentage range this year.

Still, direct-to-consumer sales rose 11 percent in the fourth quarter, while international revenue, especially in the Asia-Pacific region, saw strong growth, raising overall sales 5 percent to $1.37 billion.

Analysts on average were expecting net revenue of $1.31 billion.

The company reported a loss of $87.9 million, or 20 cents per Class C share, in the quarter ended Dec. 31, compared with a profit of $103.2 million, or 23 cents per share, a year earlier.

Under Armour also said it would take further steps to restructure its business by closing facilities and terminating leases, resulting in a pre-tax charge between $110 million and $130 million this year.

(Additional reporting by Siddharth Cavale in Bengaluru; Editing by Shounak Dasgupta)

By Nivedita Balu

Stocks treated in this article : Nike, Under Armour, adidas
Stocks mentioned in the article
ChangeLast1st jan.
ADIDAS -1.59% 185.75 Delayed Quote.11.13%
DJ INDUSTRIAL 0.22% 25119.89 Delayed Quote.1.62%
NASDAQ 100 0.63% 7403.8914 Delayed Quote.15.31%
NASDAQ COMP. 0.63% 7855.1179 Delayed Quote.13.36%
NIKE -0.36% 77.47 Delayed Quote.23.85%
S&P 500 0.40% 2809.55 Real-time Quote.4.67%
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Financials ($)
Sales 2018 5 171 M
EBIT 2018 158 M
Net income 2018 47,1 M
Debt 2018 513 M
Yield 2018 -
P/E ratio 2018 203,01
P/E ratio 2019 69,53
EV / Sales 2018 1,89x
EV / Sales 2019 1,77x
Capitalization 9 273 M
Duration : Period :
Under Armour Technical Analysis Chart | UAA | US9043111072 | 4-Traders
Technical analysis trends UNDER ARMOUR
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus HOLD
Number of Analysts 31
Average target price 16,8 $
Spread / Average Target -22%
EPS Revisions
Kevin A. Plank Chairman & Chief Executive Officer
Patrik Frisk President & Chief Operating Officer
David E. Bergman CFO & Principal Accounting Officer
Paul Fipps Chief Technology & Digital Officer
Douglas E. Coltharp Independent Director
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