Amid weak Q4 results, Under Armour loses key exec

In addition to disappointing fourth quarter sales, Under Armour announced that its CFO is stepping down.



The company reported that CFO Chip Molloy is leaving the company “due to personal reasons,” and David Bergman, Under Armour’s senior VP, corporate finance, will serve as acting CFO. Molloy will remain with the company in an advisory capacity to assist with the transition, the brand said.



The news further amplified the company’s weak fourth quarter earnings. For the period ending December 31, 2016, revenues increased 12% to $1.3 billion. This was driven by a 5% increase in wholesale revenues, which hit $742 million, and a 23% increase in direct-to-consumer revenues totaling $518 million. However, they came in lower than analysts’ expectations of $1.41 billion.



Selling, general and administrative expenses grew 9% to $420 million, or 32.1% of sales (down 70 basis points). The factors impacting these categories included continued investments in the company's highest growth businesses: footwear, international, and direct-to-consumer.



Also impacted were net income, which decreased 1% to $105 million, and operating income, which declined 6% to $167 million.



For the full year, revenues increased 22% to $4.8 billion, including a 19% increase in wholesale revenues to $3.1 billion, and a 27% increase in direct-to-consumer revenues, which reached $1.5 billion. Direct-to-consumer revenues reached 31% of total revenues compared with 30% in 2015.



However, full-year selling, general and administrative expenses grew 22%, reaching $1.8 billion, or 37.8% of revenues.



Operating income increased 3% to $420 million, and net income grew 11% to $259 million.



Looking ahead to 2017, Under Armour expects to grow net revenues between 11% and 12%, reaching nearly $5.4 billion.



"Looking forward, our successful track record of re-defining performance gives us great confidence that the opportunities for long-term growth at Under Armour have never been greater," said Kevin Plank, Under Armour chairman and CEO. "The current environment represents an inflection point to maximize our unique strengths by staying on offense -- investing smartly in innovation, deepening our Brand connection with consumers and amplifying our focus on operational excellence -- positioning Under Armour as a stronger company.”