• Revenue: Down 10% to $1.2 billion.

• North America Revenue: Declined 14% due to softer full-price wholesale demand and lower sales to the off-price channel.

• EMEA Revenue: Flat on a reported and currency-neutral basis.

• APAC Revenue: Down 10%, or 7% on a currency-neutral basis.

• Latin America Revenue: Up 16%, or 12% on a currency-neutral basis.

• Wholesale Revenue: Down 8%.

• Direct-to-Consumer Revenue: Declined 12%, with a 25% decline in e-commerce.

• Gross Margin: Increased 110 basis points to 47.5%.

• SG&A Expenses: Increased 42% to $837 million; adjusted SG&A expenses down 6% to $555 million.

• Operating Loss: $300 million; adjusted operating income of $8 million.

• Adjusted Diluted Earnings Per Share: $0.01.

• Inventory: Down 15% compared to last year.

• Cash Position: $885 million.

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

• Fiscal '25 Adjusted Operating Income Outlook: $140 million to $160 million.

• Fiscal '25 Adjusted Diluted Earnings Per Share Outlook: $0.19 to $0.22.

• Warning! GuruFocus has detected 3 Warning Sign with SRRK.

Release Date: August 08, 2024

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

Positive Points

• Under Armour Inc (NYSE:UAA) started the fiscal year ahead of expectations, showing early progress in executing its 'Protect This House' strategy.

• The company has made significant leadership hires, including Eric Liedtke as EVP of Brand Strategy, to enhance brand growth and strategy.

• Under Armour Inc (NYSE:UAA) is focusing on reducing SKU/style count by 25% to streamline operations and improve product focus.

• The company is seeing positive traction from shifting its marketing strategy to focus more on full-price selling rather than discounts.

• Gross margin improved by 110 basis points to 47.5%, driven by reduced discounting and supply chain benefits.

Negative Points

• Revenue declined by 10% to $1.2 billion, with a significant 14% drop in North America due to softer wholesale demand and lower off-price channel sales.

• The Direct-to-Consumer (DTC) business saw a 12% decline, primarily due to a 25% drop in e-commerce sales from reduced promotional activity.

• APAC revenue decreased by 10%, impacted by a softening macro environment and competitive pressures.

• SG&A expenses increased by 42% to $837 million, although adjusted SG&A was down 6% due to cost management actions.

• The company expects continued revenue declines in the second quarter, with a projected 12% decrease compared to the prior year.

Q & A Highlights

Q: Kevin, what gives you confidence in Under Armour's ability to deliver on the sales growth guidance for the second half of the year? A: Kevin Plank, CEO, expressed confidence in the company's strategy and team, emphasizing the importance of assembling a strong team and executing their strategy effectively. He highlighted the addition of Eric Liedtke as a positive step and noted the company's focus on macroeconomic factors while maintaining a sense of optimism about future progress.