On November 8, 2023, Under Armour Inc (UAA, Financial) released its unaudited financial results for the second quarter of fiscal 2024, ending September 30, 2023. Despite facing headwinds, particularly in the North American market, the company managed to maintain its profitability, with a notable increase in gross margin and net income.
Financial Performance Overview
Under Armour Inc (UAA, Financial) reported steady revenue of $1.6 billion, matching the prior year's figures, with a slight 1 percent decrease on a currency-neutral basis. The company's wholesale revenue dipped by 1 percent to $940 million, while direct-to-consumer revenue saw a 3 percent increase to $596 million, bolstered by eCommerce and owned and operated store revenue growth.
Regionally, North America experienced a 2 percent revenue decline to $991 million, while international revenue climbed by 5 percent to $573 million, or a 3 percent increase currency neutral. Apparel revenue grew by 3 percent to $1.1 billion, although footwear revenue fell by 7 percent to $351 million. Accessories revenue saw a modest 3 percent increase to $114 million.
The company's gross margin improved significantly, up 260 basis points to 48.0 percent, primarily due to supply chain efficiencies and lower freight expenses. Selling, general & administrative expenses rose slightly by 2 percent to $606 million. Operating income reached $146 million, and net income increased to $110 million, resulting in diluted earnings per share of $0.24.
Strategic and Financial Highlights
Under Armour's inventory stood at $1.1 billion, up 6 percent, with cash and cash equivalents totaling $656 million at quarter's end. The company continued its share buyback program, repurchasing $50 million of its Class C common stock during the quarter.
President and CEO Stephanie Linnartz commented on the results, stating,
“Our second quarter results, particularly profitability, exceeded our expectations,”and emphasized the company's commitment to balancing profitability with strategic investments for long-term growth.
Fiscal 2024 Outlook and Adjustments
Under Armour Inc (UAA, Financial) updated its fiscal 2024 outlook, now expecting revenue to decline by 2 to 4 percent, adjusting from the previous "flat to up slightly" forecast. Gross margin projections improved, anticipated to rise by 100 to 125 basis points compared to the earlier estimate of a 25 to 75 basis point increase. The company aims to keep selling, general & administrative expenses "flat to down slightly," and maintains its operating income forecast at $310 million to $330 million. The effective tax rate and diluted earnings per share projections remain unchanged, with capital expenditures expected to reach between $230 million and $250 million.
Under Armour Inc (UAA, Financial) will continue to navigate the dynamic market conditions while executing its strategic priorities. The company's balanced approach aims to sustain profitability and invest in areas that will drive future growth. Investors and stakeholders can access the full conference call and webcast details on the company's investor relations website.
For a more detailed analysis of Under Armour Inc (UAA, Financial)'s financial results and outlook, visit GuruFocus.com.
Explore the complete 8-K earnings release (here) from Under Armour Inc for further details.
