American multinational clothing brand Under Armour store seen in Hong Kong.
Budrul Chukrut | SOPA Images | Lightrocket | Getty Images
Under Armour on Wednesday cut its profit forecast for the fiscal year 2023 as more promotions on its athletic apparel ate into margins.
The company now expects earnings per share for the full year to come in between 61 cents and 67 cents, down from an earlier guide of between 79 cents and 84 cents. Gross margin is expected to be down 375 to 425 basis points, a worsened outlook from the previous range of 150 to 200 basis points.
Still, Under Armour’s fiscal first-quarter results matched Wall Street expectations.
Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
- Earnings per share: 3 cents, adjusted, vs. 3 cents expected
- Revenue: $1.35 billion vs. $1.34 billion expected
The company said revenue was driven in part by higher prices. North America revenue during the period was flat year over year at $909 million, while international revenue declined 3.3% to $431 million, dragged lower by an 8% decrease in the Asia-Pacific region. On a currency neutral basis, international revenue rose 1.5%.
Gross margin for the period declined 280 basis points compared with the prior year.
The cost of goods sold increased from the same three months in 2021 to $718.9 million, making up 53.3% of net revenue compared with 50.5% of net revenue the year prior.
Chief Financial Officer David Bergman said on an earnings call the company is “not excited about being more promotional” but defended the discounts given the inflationary environment.
Net income before adjustments was $7.68 million, or 2 cents per share.
Under Armour reported $10 million in legal expenses tied to ongoing litigation. Last week, Under Armour agreed to settle a lawsuit with UCLA for $67.49 million over a terminated apparel contract.
The company said it expects the litigation costs to continue to weigh on profits, citing a 2 cent negative impact on EPS for the full year.
Under Armour founder and executive chairman Kevin Plank said Wednesday the company would choose a new CEO “by year’s end.” Interim CEO Colin Browne has been in the role since Patrick Frisk stepped down June 1.