Under Armour rebound continues; shifting fiscal year

Under Armour’s turnaround maintained momentum quarter as the activewear brand reported fourth-quarter sales and earnings that beat estimates. But supply chain concerns weighed on its outlook.

The Baltimore-based sports activewear brand is shifting its fiscal year to March 31 from December 31 after a three-month transition period from January 1 to March 31. Under Armour's fiscal year 2023 will run from April 1, 2022, through March 31, 2023. Consequently, there will be no fiscal year 2022.

Under Armour reported net income of $109.7 million, or $0.23 per share, for the quarter ended Dec. 31, down from $184.5 million, or $0.40 per share, last year. Excluding restructuring and impairment charges, adjusted earnings per share of $0.14 beat analyst estimates for $0.6.

Total revenue increased 9% to $1.5 billion and topped estimates of $1.469 billion. E-commerce sales rose 4% and represented 42% of the company’s total direct-to-consumer business during the quarter.

In North America, sales rose 15% to $1.1 billion.  Internationally, overall revenue rose 3% to $461 million.

Apparel sales during quarter increased 18% to $1.1 billion; footwear sales rose 17% to $283 million. Accessories revenue fell 27% to $107 million.

For the full year, Under Armour reported net income of $360 million. Sales rose 27% to $5.7 billion.

“The final quarter of 2021 demonstrated the power and consistency of Under Armour's strategic playbook, which allowed us to capitalize on improving brand strength and consumer demand," said Under Armour president and CEO Patrik Frisk. "By staying hyper-focused on operational excellence and serving the needs of athletes, we were able to deliver record revenue and earnings results for the full year."

Under Armour warned that, given continued uncertainty related to COVID-19, particularly the ongoing and evolving impact of supply chain constraints on its suppliers and logistics providers, it currently expects material impacts for its spring-summer 2022 product season. The company also noted there could be further material impacts on its results in future periods.

For its fiscal year transition period, Under Armour expects revenue to rise at a mid-single-digit rate, up from previous guidance for a low single-digit rate, including 10 percentage points of headwinds from a reduction in the spring-summer 2022 order book due to COVID-related supply chain constraints. Earnings per share are expected to be $0.02 to $0.03.