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01/11 03:09
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents mixed signals: a strong cash position and EPS beat are positive, but revenue decline and operating loss are concerning. The Q&A highlights management's cautious optimism, focusing on brand elevation and leadership changes. The market cap suggests moderate volatility, leading to a neutral stock price prediction.
Q4 2024 Revenue $1.3 billion, down 5% year-over-year due to a 10% decline in North America driven by softer wholesale demand and lower sales to the off-price channel.
Q4 2024 Gross Margin 45%, up 170 basis points year-over-year, driven by 260 basis points of supply chain benefits including lower product and freight costs.
Q4 2024 SG&A Expenses Up 5% year-over-year; adjusted SG&A expenses were down 5% excluding a $58 million litigation reserve expense due to ongoing cost management actions.
Q4 2024 Operating Income Operating loss of $4 million; adjusted operating income of $54 million excluding litigation reserve.
Q4 2024 Diluted Earnings Per Share $0.02; adjusted diluted earnings per share of $0.11.
Full Year 2024 Revenue $5.7 billion, down 3% year-over-year primarily due to challenges in North America.
Full Year 2024 Gross Margin 46.1%, up 130 basis points year-over-year, driven primarily by supply chain benefits.
Full Year 2024 SG&A Expenses $2.4 billion, up 1% year-over-year; adjusted SG&A expenses were down 2% to $2.3 billion excluding an $80 million litigation reserve.
Full Year 2024 Operating Income $230 million; $310 million on an adjusted basis excluding litigation reserve.
Full Year 2024 Diluted Earnings Per Share $0.52; adjusted diluted earnings per share of $0.54, beating previous outlook.
Fiscal 2025 Restructuring Charges Estimated pre-tax restructuring and related charges of approximately $70 million to $90 million.
Fiscal 2025 Revenue Outlook Expected to decline at a low double-digit rate, including a 15% to 17% decline in North America.
Fiscal 2025 SG&A Expenses Outlook Expected to be down 2% to 4% year-over-year.
Fiscal 2025 Gross Margin Improvement Expected improvement of 75 to 100 basis points due to reduced promotional activities.
Cash Position $859 million with no borrowings under a $1.1 billion revolving credit facility.
Inventory Down 19% to $958 million, approaching pre-pandemic levels.
Share Buyback Program New three-year, $500 million share buyback program approved by the Board.
New Product Launches: Delivered six new footwear drops in February, including Infinite Pro, Infinite Elite, and Curry Color Drops.
Product Strategy: Focusing on delivering better products and storytelling to amplify demand and loyalty, with a commitment to innovation.
Product Assortment: Refining product assortment by reducing SKU count by roughly 25% over the next 18 months.
Speed to Market: Pursuing a faster 6 and 12-month go-to-market capability, demonstrated by the successful launch of the StealthForm Uncrushable Hat.
Market Positioning: Repositioning Under Armour as a premium brand by reducing discounting and enhancing storytelling.
International Market Outlook: Expecting low single-digit revenue decline in international markets due to conservative consumer trends.
North America Revenue Outlook: Anticipating a low double-digit revenue decline in North America, driven by lower wholesale orders and proactive brand health restoration.
Operational Efficiencies: Anticipating SG&A expenses to be down 2% to 4% in fiscal 2025, with a restructuring plan expected to incur $70 million to $90 million in charges.
Cost Management: Implementing cost management actions, including reduced salary and non-salary compensation, to optimize SG&A.
Inventory Management: Inventory expected to be down at a high single-digit rate in Q1 fiscal 2025.
Strategic Shift: Refocusing on core competencies in performance and technical innovation, particularly in men's apparel.
Leadership Changes: New leadership in North America with Kara Trent focusing on digital, team sports, and premium wholesale partners.
Brand Strategy: Narrowing the Protect This House strategy to three priorities: better products, smarter operations, and elevated consumer experiences.
Revenue Decline: Under Armour anticipates a low double-digit revenue decline in fiscal 2025, with a projected 15% to 17% drop in North America due to lower wholesale orders, proactive decisions to restore brand health, and lead times for new products.
Competitive Pressures: Increased competition from new entrants has altered shopping behavior and preferences, contributing to a challenging retail environment.
Leadership Turnover: Ongoing turnover in critical leadership roles has hindered agility and decisiveness, impacting execution across product and marketing.
Supply Chain Challenges: The company faces challenges in its supply chain and planning processes, which have contributed to operational inefficiencies.
Economic Factors: Conservative macro consumer trends are expected to impact international revenue, particularly in EMEA and APAC regions.
Discounting and Promotions: Proactive actions to reduce discounting levels in the e-commerce business may weigh on top-line revenue in the short term.
Restructuring Costs: Under Armour expects to incur restructuring charges of approximately $70 million to $90 million as part of its efforts to streamline operations.
Brand Perception: The brand's perception has been negatively impacted by a focus on price competition rather than performance and innovation.
Inventory Management: Inventory management is a top priority, with expectations of a high single-digit rate decline in inventory in the first quarter of fiscal 2025.
Brand Reconstitution: Under Armour aims to reconstitute its brand strength over the next 18 months by focusing on brand building fundamentals, including product quality, storytelling, and team building.
Protect This House Strategy: The strategy is narrowed to three priorities: delivering better products and storytelling, running smarter plays by simplifying operations, and elevating consumer experiences.
Product Innovation: Under Armour plans to reinvigorate its culture of innovation, focusing on performance solutions that meet athlete needs and ensuring effective storytelling around product launches.
Leadership Changes: New leadership is being implemented to simplify the business and focus on key areas such as digital, team sports, and premium wholesale partners.
Restructuring Plan: A Board-approved restructuring plan is expected to incur pre-tax charges of approximately $70 million to $90 million to streamline operations and improve efficiencies.
Fiscal 2025 Revenue Expectations: Revenue is expected to decline at a low double-digit rate, with a 15% to 17% decline in North America.
Gross Margin Improvement: Despite revenue contraction, a gross margin improvement of 75 to 100 basis points is anticipated due to reduced discounting and proactive product initiatives.
SG&A Expenses: SG&A expenses are expected to decrease by 2% to 4% in fiscal 2025.
Adjusted Operating Income: Adjusted operating income is projected to be between $130 million to $150 million, translating to adjusted diluted earnings per share of $0.18 to $0.21.
CAPEX: Capital expenditures are anticipated to be approximately $200 million to $220 million.
Share Buyback Program: A new three-year, $500 million share buyback program has been approved by the Board of Directors.
Share Buyback Program: The Board of Directors approved a new three-year, $500 million share buyback program.
The earnings call presents mixed signals: a decline in revenue and operating losses contrast with improved gross margins and inventory management. The Q&A reveals cautious optimism about restructuring and brand activation, but concerns about tariffs and unclear guidance linger. The market cap of $2.99 billion suggests moderate sensitivity to these factors. Overall, the neutral sentiment reflects balanced positive and negative elements, with no strong catalysts to drive significant stock price movement.
The earnings call reveals mixed sentiments. Financial performance shows a revenue decline but improved margins and profitability. The raised guidance for operating income and EPS is positive, yet supply chain challenges and competitive pressures persist. Q&A highlights strategic marketing investments and product development, but lacks clarity on gross margin opportunities and product feedback. Given the company's market cap, the stock price is likely to remain stable, with no major catalysts for significant movement.
The earnings call presents mixed signals: a strong cash position and EPS beat are positive, but revenue decline and operating loss are concerning. The Q&A highlights management's cautious optimism, focusing on brand elevation and leadership changes. The market cap suggests moderate volatility, leading to a neutral stock price prediction.
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