Under Armour, Inc. (NYSE: UA, UAA) announced unaudited financial results for its fourth quarter and full-year fiscal 2024, which ended March 31, 2024. The company reports its financial performance following accounting principles generally accepted in the United States of America. This press release refers to “currency neutral” and “adjusted” amounts, which are non-GAAP financial measures described below under the “Non-GAAP Financial Information” paragraph.
“Amid a challenging retail environment in fiscal 2024 that included high inventories and a consistent drumbeat of promotions – we demonstrated disciplined expense control and delivered results that were aligned with our previous outlook,” said Under Armour President and CEO Kevin Plank. “We also maintained a strong balance sheet, closing the year with a solid cash position and healthy inventory levels.”
Fourth Quarter Fiscal 2024 Review
- Revenue was down 5 percent to $1.3 billion (down 5 percent currency neutral).
- North America revenue decreased 10 percent to $772 million, and international revenue increased 7 percent to $561 million (up 6 percent currency neutral). In the international business, revenue increased 10 percent in EMEA (up 7 percent currency neutral), 1 percent in Asia-Pacific (up 5 percent currency neutral), and 20 percent in Latin America (up 12 percent currency neutral).
- Wholesale revenue decreased 7 percent to $850 million, and direct-to-consumer revenue was flat at $455 million. Owned and operated store revenue increased 7 percent, and eCommerce revenue decreased 8 percent, representing 43 percent of the total direct-to-consumer business for the quarter.
- Apparel revenue decreased 1 percent to $877 million. Footwear revenue was down 11 percent to $338 million. Accessories revenue was down 7 percent to $89 million.
- Gross margin increased 170 basis points to 45.0 percent, driven primarily by supply chain benefits related to lower product and freight costs. This was partially offset by unfavorable foreign currency impacts and proactive inventory management actions, including increased promotional activities in our direct-to-consumer business.
- Selling, general & administrative expenses were up 5 percent to $603 million. Excluding a $58 million litigation reserve expense, adjusted selling, general & administrative expenses were down 5 percent to $546 million.
- Operating loss was $4 million. Adjusted operating income was $54 million.
- Net Income was $7 million. Adjusted net income was $49 million.
- Diluted earnings per share was $0.02. Adjusted diluted earnings per share was $0.11.
- Inventory was down 19 percent to $958 million.
- At the end of the quarter, Cash and Cash Equivalents were $859 million, and no borrowings were outstanding under the company’s $1.1 billion revolving credit facility.
Full Year Fiscal 2024 Review
- Revenue was down 3 percent to $5.7 billion (down 4 percent currency neutral).
- North America revenue decreased 8 percent to $3.5 billion, and international revenue increased 8 percent to $2.2 billion (up 7 percent currency neutral). Within the international business, revenue increased 9 percent in EMEA (up 6 percent currency neutral), 6 percent in Asia-Pacific (up 9 percent currency neutral), and 8 percent in Latin America (down 1 percent currency neutral).
- Wholesale revenue decreased 7 percent to $3.2 billion, and direct-to-consumer revenue increased 3 percent to $2.3 billion due to a 5 percent increase in owned and operated store revenue and a 1 percent increase in eCommerce revenue, which represented 41 percent of the total direct-to-consumer business for the year.
- Apparel revenue decreased 2 percent to $3.8 billion, footwear revenue decreased 5 percent to $1.4 billion, and accessories revenue declined 1 percent to $406 million.
- Gross margin increased 130 basis points to 46.1 percent, driven primarily by supply chain benefits related to lower freight and product costs. This was partially offset by proactive inventory management actions, including increased promotional activities in our direct-to-consumer business.
- Selling, general & administrative expenses were up 1 percent to $2.4 billion. Excluding an $80 million litigation reserve expense, adjusted selling, general & administrative expenses were down 2 percent to $2.3 billion.
- Operating income was $230 million. Excluding the company’s litigation reserve expense, adjusted operating income was $310 million.
- Net Income was $232 million. Excluding a $50 million earn-out benefit in connection with the sale of the MyFitnessPal platform, the litigation reserve expense, and related tax impacts, adjusted net income was $245 million.
- Diluted earnings per share was $0.52. Adjusted diluted earnings per share was $0.54.
Fiscal 2025 Restructuring Plan
To strengthen and support the company’s financial and operational efficiencies, Under Armour’s Board of Directors has approved a restructuring plan. In conjunction with this plan, the company expects to incur total estimated pre-tax restructuring and related charges of approximately $70 to $90 million, including:
- Up to $50 million in cash-related charges, consisting of approximately $15 million in employee severance and benefits costs, and $35 million related to various transformational initiatives, and
- Up to $40 million in non-cash charges comprised of approximately $7 million in employee severance and benefits costs and $33 million in facility, software and other asset-related charges and impairments.
Fiscal 2025 Outlook
“Due to a confluence of factors, including lower wholesale channel demand and inconsistent execution across our business, we are seizing this critical moment to make proactive decisions to build a premium positioning for our brand, which will pressure our top and bottom line in the near term,” Plank continued. “Over the next 18 months, there is a significant opportunity to reconstitute Under Armour’s brand strength through achieving more, by doing less and focusing on our core fundamentals: driving demand through better products and storytelling, running smarter plays like simplifying our operating model and elevating our consumer experience. In parallel, we’re focused on cost management and implementing the strategies necessary to grow our brand and improve shareholder value as we move forward.”
Key points related to Under Armour’s fiscal 2025 outlook include:
- Revenue is expected to be down at a low-double-digit percentage rate. This includes an expected 15 to 17 percent decline in North America as the company works to meaningfully reset this business following years of heightened promotional activities, particularly in its DTC business and a low-single-digit percent decline in its international business due to more conservative macro consumer trends and actions to protect the brand strength it has built.
- Gross margin is expected to be up 75 to 100 basis points compared to the prior year, driven by a material reduction in promotional and discounting activities in the company’s direct-to-consumer business and product costing benefits.
- Selling, general, and administrative expenses are expected to be down 2 to 4 percent.
- Operating income is expected to be $50 to $70 million. Excluding the mid-point of anticipated restructuring charges, adjusted operating income is expected to be $130 to $150 million.
- Diluted earnings per share is expected to be between $0.02 and $0.05. Adjusted diluted earnings per share is expected to be between $0.18 and $0.21.
- Capital expenditures are expected to be between $200 to $220 million.
Share Buyback Program
The company also announced that its Board of Directors has authorized the repurchase of up to $500 million of Under Armour’s outstanding Class C common stock. Repurchases under this program may be made over the next three years through various methods, including accelerated share repurchase, open market, or privately negotiated transactions.
About Under Armour, Inc.
Under Armour, Inc., headquartered in Baltimore, Maryland, is a leading inventor, marketer, and distributor of branded athletic performance apparel, footwear, and accessories. Designed to empower human performance, Under Armour’s innovative products and experiences are engineered to make athletes better. For further information, please visit http://about.underarmour.com.
