- Prachi Singh |
Under Armour, Inc. reported revenue growth of 5 percent or 4 percent currency neutral to 1.4 billion dollars for the fourth quarter of fiscal 2017. Revenue to wholesale customers declined 1 percent to 733 million dollars, while direct-to-consumer revenue was up 11 percent to 575 million dollars during the quarter. Revenue for the full year was up 3 percent to 5 billion dollars. Revenue to wholesale customers declined 3 percent to 3 billion dollars and direct-to-consumer revenue was up 14 percent to 1.7 billion in 2017.
"After years of rapid growth and building a globally recognized brand, the dynamic landscape of 2017 was a catalyst for us to begin strategically transforming Under Armour into an operationally excellent company," said Under Armour Chairman and CEO Kevin Plank, adding, "A year into this journey, our fourth quarter and full year results demonstrate that the tough decisions we're making are generating the stability necessary to create a more consistent and predictable path to deliver long-term value to our shareholders."
Fourth quarter performance highlights
Under Armour said, consistent with previous expectations, fourth quarter revenue in North America was down 4 percent but strong international momentum continued with revenue up 47 percent or 43 percent currency neutral, representing 23 percent of total revenue. Within the international business, revenue in EMEA was up 45 percent or 37 percent currency neutral, up 56 percent or 55 percent currency neutral in Asia-Pacific and up 36 percent or 34 percent currency neutral in Latin America.
Apparel revenue during the quarter increased 2 percent to 952 million dollars, with growth in men's training and global football tempered by declines in the team sports and outdoor categories. Footwear revenue was up 9 percent to 246 million dollars, driven by strength in running, offset by team sports and basketball. Accessories revenue increased 6 percent to 111 million dollars led by men's training and running.
Gross margin declined 150 basis points to 43.2 percent, while adjusted gross margin, which excludes a $1 million impact from restructuring efforts, was 43.3 percent. Operating loss was 37 million dollars. The company reported net loss of 88 million dollars in the fourth quarter. Excluding both a one-time charge related to the US Tax Act, and the impact of the restructuring plan, adjusted net loss was 1 million dollars. Diluted earnings per share was negative 0.20 dollar.
Review of full year results
Full year North America revenue was down 5 percent but international revenues rose 46 percent or 47 percent currency neutral, representing 22 percent of total revenue. Full year revenue in EMEA was up 42 percent or 43 percent currency neutral, 61 percent or 63 percent currency neutral in Asia-Pacific and 28 percent or 26 percent currency neutral in Latin America.
Apparel revenue increased 2 percent to 3.3 billion dollars, as strength in men's training and golf was moderated by declines in outdoor and team sports. Footwear revenue was up 3 percent to 1 billion dollars, driven by strength in running and men's training mitigated by basketball and youth, while accessories revenue increased 10 percent to 446 million dollars led by strength in men's training.
Gross margin for the year declined 140 basis points to 45 percent, while adjusted gross margin, which excludes a 5 million dollars impact from restructuring efforts, was 45.1 percent. Operating income was 28 million dollars and adjusted operating income was 157 million dollars. Net loss was 48 million dollars in 2017. Excluding both the fourth quarter one-time charge related to the US Tax Act, and the impact of the restructuring plan, adjusted net income was 87 million dollars. Diluted earnings per share were negative 0.11 dollar, while adjusted diluted earnings per share were 0.19 dollar.
Under Armour reveals expectations for FY18
Key points related to Under Armour's full year 2018 outlook, the company added, include net revenue to be up at a low single-digit percentage rate reflecting a mid-single-digit decline in North America and international growth of greater than 25 percent.
The company expects FY18 gross margin to increase approximately 50 basis points to 45.5 percent due to benefits from lower planned promotional activity, product costs, channel mix and changes in foreign currency, operating income to reach 20 million dollars to 30 million dollars and adjusted operating income is to be 130 to 160 million dollars excluding the impact of continued restructuring efforts.
Picture:Under Armour website