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Under Armour Hikes Outlook for 2021

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Things are looking up for Under Armour, which has had its share of bad quarters in the recent past but appears to be turning its performance around. At least that’s the message to be taken from its announcement last week that it is raising its guidance for the full year after reporting third-quarter earnings that were double Wall Street’s consensus targets. (Ed. Note: That’s a good thing!)

The optimism comes from results that show that revenues climbed eight percent in the third quarter.

“Our third-quarter results were driven by strong demand for the Under Armour brand and our ability to execute quickly to meet the needs of our consumers and customers,” said Under Armour president and CEO Patrik Frisk. “With industry-leading innovations, increased marketing efforts to deepen our connection with Focused Performers and consistent operational discipline, we’re building greater brand affinity and are on track to deliver record revenue and earnings results in 2021.”

Among the strong third quarter results:

  • Revenue was up eight percent to $1.5 billion.
  • Gross margin increased 310 basis points to 51.0 percent, driven by benefits from pricing and channel mix, offset by the absence of MyFitnessPal and supply chain headwinds.
  • Restructuring charges were $17 million.
  • Operating income was $172 million.
  • Net income was $113 million.
  • Inventory was down 21 percent to $838 million.

The $1.5 billion is sales were just ahead of Wall Street’s consensus target of $1.48 billion. Adjusted earnings of 31 cents topped Wall Street’s consensus target of 15 cents.

Looking ahead, Under Armour’s full-year 2021 outlook includes the projection that revenue is expected to be up approximately 25 percent compared to the previous expectation of a low-20s percentage increase, reflecting a high-20s percentage growth rate in North America and a mid-30s percentage growth rate in its International business.

In addition, operating income is expected to reach approximately $425 million compared to the previous range of $215 million to $225 million. Excluding the impact of restructuring efforts, adjusted operating income is expected to reach approximately $475 million compared to the previous expectation of $340 million to $350 million; and the strong results came about as the company is in the midst of a $550 million to $600 million restructuring plan to improve profitability and cash flow. The company now expects to recognize $525 million to $575 million in charges related to this plan and has recognized $500 million of pre-tax charges.

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