Is This the Turnaround for Under Armour?

By Chris Lange Updated Jan 12, 3:27AM EST · Published Feb 13, 9:15AM EST

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Is This the Turnaround for Under Armour? — © Thinkstock

Under Armour Inc. (NYSE: UAA) reported its fourth-quarter financial results before the markets opened on Tuesday. The company said that it had less than $0.01 in earnings per share (EPS) on $1.37 billion in revenue, which compares with consensus analyst price targets that are calling for breakeven earnings and $1.31 billion in revenue. In the same period of last year, the company said it had EPS of $0.23 and $1.31 billion in revenue.

Previously, Under Armour had reported a restructuring plan, and after additional review, it has announced an additional 2018 restructuring plan identifying further opportunities to optimize operations. In conjunction with this plan, roughly $110 million to $130 million of pretax restructuring and related charges are expected to be incurred, including the following:

Up to $105 million in cash-related charges, consisting of up to $55 million in facility and lease terminations and up to $50 million in contract termination and other restructuring charges

Up to $25 million in noncash charges, comprised of up to $10 million of inventory-related charges and up to $15 million of asset-related impairments

Separately, Under Armour’s segments for the fourth quarter were reported as follows:

Apparel net revenues increased 2.5% year over year to $951.67 million.
Footwear net revenues grew 9.5% to $246.2 million.
Accessories net revenues increased 6.1% to $110.67 million.

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Looking ahead to the 2018 full year, the company expects to see adjusted operating income in the range of $130 million to $160 million and revenues up in the low single-digit range. The consensus estimates call for $0.22 in EPS on $5.13 billion in revenue for the year.

On the books, Under Armour cash and cash equivalents totaled $312.48 million at the end of the quarter, up from $250.47 million in the same period of last year.

Kevin Plank, Under Armour board chair and chief executive, commented:

After years of rapid growth and building a globally recognized brand, the dynamic landscape of 2017 was a catalyst for us to begin strategically transforming Under Armour into an operationally excellent company. A year into this journey, our fourth quarter and full year results demonstrate that the tough decisions we’re making are generating the stability necessary to create a more consistent and predictable path to deliver long-term value to our shareholders.

Shares of Under Armour closed Monday at $14.23, with a consensus analyst price target of $13.08 and a 52-week range of $11.40 to $23.46. Following the announcement, the stock was up about 11% at $15.86 in early trading indications Tuesday.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.