US sportswear maker Under Armour lowered its annual gross margin improvement forecast after revenue fell 7 per cent in its second fiscal quarter. It increased its estimate of the Middle East headwind to 45 million dollars from 35 million dollars, while retaining its adjusted operating profit target, which includes approximately 70 million dollars in tariff refunds.
Economics & Markets··Evening
Revenue falls across regions
US sportswear maker Under Armour lowered its annual gross margin improvement forecast alongside its second fiscal quarter results.[1], [2]
Revenue in the quarter ended in September fell 7 per cent to approximately 1.2 billion dollars. North America contributed 737 million dollars and international operations 509 million dollars, each down 7 per cent. Excluding currency movements, international revenue declined 9 per cent. Europe, the Middle East and Africa and Asia-Pacific each recorded a 9 per cent decline, while Latin America grew 3 per cent.[1]
Footwear and online sales contract
Footwear revenue fell 11 per cent to 234 million dollars, while apparel fell 6 per cent to 880 million dollars. Direct-to-consumer revenue declined 8 per cent to 494 million dollars. Within that channel, ecommerce fell 12 per cent and store revenue dropped 7 per cent. Gross margin narrowed 30 basis points to 47 per cent; the company cited currency, channel and geographic mix and pricing effects.[1]
Middle East assumption rises
Under Armour reduced expected annual gross margin improvement from 220–270 basis points to 170–220 basis points. It increased the assumed Middle East headwind from 35 million dollars to 45 million dollars. The annual adjusted operating profit forecast remained 140–160 million dollars, including approximately 70 million dollars of tariff refunds. Quarterly operating income was 15 million dollars and the net loss was 0.4 million dollars.[1]
