The interior of the Under Armor store can be seen on November 3, 2021 in Houston, Texas.
Brandon Bell Getty Images
Under Armor is looking forward to a difficult year ahead, shaken by the challenges of the global supply chain and another round of blocking Covid in China, which is worsening demand.
The maker of sneakers and clothing on Friday issued disappointing forecasts for its fiscal 2023, after reporting an unexpected loss for the three months ended March 31, and sales that fell below the forecasts of Wall Street.
The news prompted investors to flee, with shares of Under Armor falling more than 17% in pre-market trading.
Also on Friday, rival Adidas said its growth in 2022 would be at the lower end of the forecast range due to the “serious impact” of coronavirus-related blockades in China. Adidas sales in the Greater China region will now fall significantly this year.
Here’s how Under Armor fared in the three-month period ended March 31, compared to what Wall Street expected, based on a Refinitiv survey of analysts:
- Loss per share: 1 cent adjusted for expected earnings of 6 cents
- Revenue: $ 1.3 billion versus expected $ 1.32 billion
Under Armor reported a net loss for the quarter of $ 59.6 million, or 13 cents a share, compared to a net profit of $ 77.8 million, or 17 cents a share, a year earlier.
With the exception of disposable items, she loses a penny per share. Analysts were looking for an adjusted earnings per share of 6 cents.
Sales rose to $ 1.3 billion from $ 1.26 billion a year earlier. That missed estimates of $ 1.32 billion.
In North America, sales rose 4% to $ 841 million. However, its international business grew by only 1% to $ 456 million, driven by a 14% decline in the Asia-Pacific region, which includes China.
China is not only a growing market for Under Armor to try to win new customers, but it is also a major manufacturing hub for much of the sportswear industry. A number of international corporations, including Apple and Estee Lauder, have warned in recent days that the impact of Chinese control over Covid will hit their business.
In the 12 months ended December 31, Under Armor produced approximately 67% of its clothing and accessories in China, Vietnam, Jordan, Malaysia and Cambodia. And almost all of his shoes are made in China, Vietnam and Indonesia, shows an annual performance.
For its fiscal year 2023, Under Armor forecasts to earn between 63 cents and 68 cents per share on an adjusted basis, which is below analysts’ expectations for 86 cents.
He sees sales increase by 5% to 7% over the previous year. Analysts expected an increase of 5.4%.
Under Armor said the forecast takes into account three percentage points of headwinds due to its decision to cancel some supplier orders due to capacity problems and supply chain delays.
The fiscal year of Under Armor lasts from April 1 to March 31 of the following year.
CEO Patrick Frisk said the brand must return to providing “sustainable, profitable returns” as global supply challenges and the emerging impacts of Covid-19 in China return to normal.
Find the full financial edition of Under Armor here.
This story is evolving. Please check again for updates.
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