Under Armour Inc (UAA) Q2 2025 Earnings Call Highlights: Navigating Revenue Declines with ...

GuruFocus News
4 min read

In This Article:

  • Revenue: Down 11% to $1.4 billion.

  • North America Revenue: Declined 13% due to softer full-price wholesale demand and lower sales to the off-price channel.

  • EMEA Revenue: Down 1% on a reported and currency-neutral basis.

  • APAC Revenue: Down 11% or 10% on a currency-neutral basis.

  • Latin America Revenue: Down 13% or 4% on a currency-neutral basis.

  • Wholesale Revenue: Down 12% driven by softer demand and lower sales to the off-price channel.

  • Direct-to-Consumer Revenue: Declined 8% with a 21% decrease in e-commerce.

  • Gross Margin: Increased by 200 basis points to 49.8%.

  • SG&A Expenses: Down 15% to $520 million.

  • Operating Income: $173 million; adjusted operating income was $166 million.

  • Diluted Earnings Per Share: $0.39; adjusted diluted earnings per share was $0.30.

  • Inventory: Down 3% compared to last year.

  • Cash Position: $531 million with no borrowings under the $1.1 billion revolving credit facility.

  • Fiscal '25 Revenue Outlook: Expected to decline at a low double-digit rate.

  • Gross Margin Outlook: Improvement of 125 to 150 basis points for the full year.

  • Adjusted Operating Income Outlook: Raised to $165 million to $185 million for the year.

  • Adjusted Diluted Earnings Per Share Outlook: $0.24 to $0.27.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Under Armour Inc (NYSE:UAA) reported a significant improvement in gross margin, driven by reduced promotions and discounting, and better product costing.

  • The company achieved a $50 million second-quarter adjusted operating income beat compared to its previous outlook.

  • Under Armour Inc (NYSE:UAA) is focusing on premiumization, with a shift towards more full-price sales and a reduction in promotional activities.

  • The company is investing in marketing and brand-building efforts to deepen its connection with consumers.

  • Under Armour Inc (NYSE:UAA) is seeing strong feedback on new products, particularly in men's apparel and footwear, with plans for significant product launches in the coming seasons.

Negative Points

  • Revenue was down 11% to $1.4 billion, with a 13% decline in North America due to softer full-price wholesale demand and lower sales to the off-price channel.

  • The North American DTC business experienced a decline, driven by a continued decrease in e-commerce sales and lower retail store sales.

  • EMEA and APAC regions also saw revenue declines, with APAC facing a challenging macro environment impacting consumer traffic.

  • The company is undergoing a restructuring plan, which includes exiting a distribution facility in California, leading to expected restructuring charges and expenses.

  • Despite gross margin improvements, the company anticipates continued pressure on revenue and profitability in the second half of the fiscal year.

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