Under Armour Drops The Ball Again In Q3 Earnings

Under Armour Inc UAA's third-quarter earnings report was no different from its second-quarter report in August: a major disappointment. Shares of Under Armour hit a new multi-year low of $15.52 on Monday and fell another 15 percent early Tuesday morning as the company's earnings report came in mixed — investors found fault with a revised outlook.

The athletic apparel company earned 22 cents per share in the third quarter on revenue of $1.406 while Wall Street analysts were expecting the company to earn 20 cents per share on revenue of $1.48 billion.

Shares of Nike Inc NKE were trading lower by nearly 2 percent, likely in sympathy with Under Armour's decline.

Total revenue during the quarter fell 5 percent from a year ago, the company said. By segment, revenue to wholesale customers fell 13 percent to $880 million but direct-to-consumer revenue rose 15 percent to $468 million. By region, revenue in North America fell 12 percent but international revenue rose 35 percent and accounted for 22 percent of total revenue.

Apparel revenue fell 8 percent to $939 million as strength in golf and sport-style was more than offset by poor performance in outdoor, women's training and youth, the company also said. Footwear revenue rose 2 percent to $285 million, accessories revenue increased 1 percent to $123 million.

Gross margin during the quarter dipped 160 basis points to 45.9 percent.

Revised 2017 Outlook

For the second consecutive quarter, Under Armour felt it prudent to revise its full-year 2017 outlook lower, as follows:

• Revenue to rise by a low single-digit percentage rate.
• Gross margin to fall 220 basis points from 46.4 percent in 2016.
• Operating income to be in a range of break-even to $10 million.
• Adjusted diluted earnings per share of $0.18 to $0.20.

At publication, shares of Under Armour were down 15.9 percent at $13.80 in Tuesday's pre-market session.

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