Under Armour swings to Q4 profit; to leave some retailers and focus on own channels

Under Armour reported better-than-expected results for its fourth quarter amid strong online and expense management. 

The athletic apparel brand also said it is moving forward with its previously revealed strategy that includes investing in its own stores and e-commerce site as it focuses on selling direct to the consumer and reducing its reliance on retail partners. Beginning in the back half of this year, Under Armour expects to leave between 2,000 and 3,000 retail partner stores, about 10,000 partner stores by the end of 2022.

The company’s net income totaled $184.5 million, or $0.40 per share, in the quarter ended Dec. 31, compared with a loss of $15.3 million, or $0.3 a share, in the year-ago period. Adjusted earnings per share was $0.12. Analysts had expected a loss of $0.07 per share.

Sales fell 3% to $1.40 billion, but topped analysts’ estimates of $1.27 billion. North American sales were down 6%, while revenue rose 7% in international markets.

Wholesale revenue fell 12. Under Armour’s direct-to-consumer business grew 11%, fueled by a 25% jump in e-commerce sales.

“Improving brand strength and consistent operational execution delivered better than expected results in the fourth quarter," said Under Armour president and CEO Patrik Frisk. "Our global team was exceptionally resilient and disciplined amid a highly challenging year which included the COVID-19 pandemic and for Under Armour, a comprehensive restructuring effort including further operating model refinements."

For the full year, revenue was down 15% to $4.5 billion, with a net loss of $549 million. Adjusted net loss was $120 million.

Under Armour previously announced a $550 million to $600 million restructuring plan designed to rebalance its cost base to improve profitability and cash flow. The company recognized $473 million of pre-tax charges for the full year, including $62 million in the fourth quarter. Of the $473 million recognized, there were $125 million in cash related charges and $348 million in non-cash related charges. As previously disclosed, the company anticipates recognizing additional charges related to this plan in the first half of 2021.

Under Armour said its board has authorized a change in its fiscal year-end from Dec. 31 to March 31, effective for the fiscal year beginning April 1, 2022.