Under Armour raises its expectations as sales from athletic wear more than doubles

4th Aug 2021, Mumbai:

Under Armour Inc upped its yearly expectations after surpassing quarterly estimates, as it sells more sports gear and footwear directly to consumers at low to no discounts, sending its stock up 5%. Customers are turning to healthy living and outdoor experiences like hiking and running, which has boosted sales at sportswear companies like Nike and Adidas AG.

Under Armour has taken advantage of the demand by focusing more on full-price sales in its brick-and-mortar and online stores, as well as preparing to exit 2,000 to 3,000 discount-heavy wholesale locations to boost profit margins.

Under Armour, located in Baltimore, has extended its product ranges with the help of actors Dwayne Johnson and Stephen Curry of the National Basketball Association. The company has also increased its marketing spending to combat competition from Lululemon Athletica and Nike. "We're going to be ready for growth when we get out of this epidemic," Chief Executive Patrik Frisk told analysts. Under Armour increased its adjusted earnings per share (EPS) projection for 2021 from 28 cents to 30 cents to between 50 cents and 52 cents. It also anticipates revenue to increase by a low-twenty percent, up from a prediction of a high-teens percent before. Analysts predict 35 cents in earnings per share and a 19.5 percent increase in revenue.

BMO Capital Markets analyst Simeon Siegel stated, "UA is a good example of a company that utilized a 'COVID-Cover' to refashion its business for multi-year success and return to under-promising and over-delivering." However, owing to the return of COVID-19, Under Armour has identified supply chain difficulties, notably in Vietnam, which contributes to approximately a third of the company's footwear and clothing supply. The company's second-quarter net sales increased by 91% to $1.35 billion, above analyst expectations of $1.21 billion. Under Armour earned 24 cents per share excluding items, above the Refinitiv IBES forecast of six cents.

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