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Tuesday, February 11, 2020

=Under Armour (UAA) reported earnings on Tue 11 Feb 20 (b/o)

Under Armour reports EPS in-line, misses on revs; guides FY20 EPS below consensus

  • Reports Q4 (Dec) earnings of $0.10 per share, excluding $0.13 of non-recurring items, in-line with the S&P Capital IQ Consensus of $0.10; revenues rose 3.7% year/year to $1.44 bln vs the $1.47 bln S&P Capital IQ Consensus.
    • Gross margin increased 230 basis points to 47.3% compared to the prior year driven primarily by pricing including lower discounts to its wholesale partners, channel mix and supply chain initiatives.
    • Inventory decreased 12% to $892 mln.
  • Co issues downside guidance for FY20, sees EPS of $0.10-0.13, inclusive of an estimated $0.01-0.02 negative impact from the company's equity interest in its Japan licensee, vs. $0.46 S&P Capital IQ Consensus.
    • Revenue is expected to be down at a low single-digit percent compared to 2019 results (vs +4% estimate). This reflects a mid to high-single-digit percentage decline in North America as work continues to rebalance the business against market demand dynamics and pro-active strategies to better protect the company's premium brand positioning. The international business is expected to grow at a low double-digit percentage rate.
    • The company's initial 2020 outlook currently includes an estimated negative impact of the coronavirus outbreak in China of approx. $50-60 mln in sales related to the first quarter of 2020.
    • Gross margin is expected to be up approx. 30-50 basis points versus the prior year due to ongoing supply chain initiatives and regional mix benefits.
  • The company also announced it is considering $325-425 mln in estimated pre-tax charges for 2020, including approx. $225-250 mln related to the possibility of foregoing opening a flagship store in New York City while pursuing sublet options for the long-term lease.
  • Based on initial assessments and timing of a potential restructuring initiative, the company could realize approx. $30-50 mln in pre-tax benefits in 2020. The company expects to complete its assessment during the first quarter of 2020, and subject to board review and approval, it would announce any potential restructuring charges upon adoption of any plan.
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