Below Armour sneakers are seen inside a retailer on November 03, 2021 in Houston, Texas.
Brandon Bell | Getty Photos
Below Armour shares fell on Friday regardless of the retailer reporting fourth-quarter earnings and gross sales forward of analysts’ estimates, as provide chain constraints are clouding its outlook.
The corporate additionally warned that heightened freight bills will weigh on earnings within the coming months. Below Armour has stated beforehand that it has been paying for costlier air cargo to maneuver items from abroad, however even delivery is extra pricey proper now.
Chief Monetary Officer David Bergman referred to as the pressures a “non permanent velocity bump.” Within the close to time period, Below Armour will stay cautious and agile till the delivery congestion and backlogs subside, he informed analysts on a post-earnings convention name.
Chief Govt Patrik Frisk stated its plan to construct a more healthy model is working, even regardless of the headwinds. The corporate’s objective is for shoppers to view Below Armour as a extra premium label, alongside manufacturers resembling Nike and Lululemon, because it focuses on key wholesale companions like Dick’s Sporting Items and Kohl’s.
The inventory was not too long ago down 10% in buying and selling Friday.
Here is how the corporate did within the three-month interval ended Dec. 31 in contrast with what analysts have been anticipating, primarily based on Refinitiv estimates:
- Earnings per share: 14 cents adjusted vs. 7 cents anticipated
- Income: $1.53 billion vs. $1.47 billion anticipated
Below Armour reported web revenue of $109.7 million, or 23 cents a share, in contrast with $184.5 million, or 40 cents a share, a yr earlier. Excluding one-time gadgets, it earned 14 cents a share, beating analysts’ estimates for 7 cents.
Income grew to $1.53 billion from $1.4 billion a yr earlier. That topped analysts’ expectations for $1.47 billion.
Web income in North America rose 15%, whereas worldwide gross sales have been up 3%. E-commerce gross sales rose 4% from year-ago ranges, representing 42% of Below Armour’s direct-to-consumer gross sales, with the rest coming from the retailer’s brick-and-mortar shops.
Inside whole income, attire was up 18%, footwear grew 17%, however equipment gross sales tumbled 27%.
A yr earlier, Below Armour noticed equipment gross sales spike as shoppers bought baseball gloves, water bottles and sun shades for out of doors actions through the Covid pandemic. The model additionally noticed a surge in its face masks gross sales.
Final yr, Below Armour introduced it was altering its fiscal yr finish date from Dec. 31 to March 31. Following a three-month transition interval from Jan. 1, 2022 to March 31, Below Armour’s subsequent fiscal yr will run from April 1 to March 31, 2023.
The retailer on Friday gave an outlook for the transition quarter. Gross sales are anticipated to be up a mid-single-digit fee, in contrast with a previous outlook of a low-single-digit improve. Provide chain constraints are limiting the quantity of spring and summer time merchandise it’s providing, and that may put some strain on its gross sales.
Earnings for that interval are forecast to be in a variety of two cents to three cents a share.
Below Armour stated it is going to wait till Might to supply a extra detailed outlook for its upcoming fiscal yr.
BMO Capital Markets analyst Simeon Siegel stated the forecast for Below Armour is probably going on the conservative facet. As Below Armour retains pulling out of low cost retailers and promoting extra of its attire and footwear at larger worth factors, the model ought to proceed to be elevated, he stated.
“Critically, they nonetheless guided for income to be up, suggesting development even with constraints,” stated Siegel.
Below Armour additionally narrowed the highest finish of a variety for its ongoing restructuring plan. It now expects to acknowledge $525 million to $550 million in expenses associated to this plan, in contrast with a previous vary of $525 million to $575 million. Below Armour stated it has booked $514 million of pretax expenses to this point.