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Under Armour reported a first-quarter loss of $589.7 million. On a per-share basis, the Baltimore-based company said it had a loss of $1.30. Today in the pre-market, UAA stock is at around $9, it means it has lost 10%.
United States company that produces footwear, sports, and casual apparel, Under Armour Inc (NYSE: UAA) said it had a decline in sales of 23% during its Q1 of 2020. The main reason is that all of its business sectors took a huge hit from the COVID-19 outbreak and its stores had to be shut down with all its turnaround plans halted. Meanwhile, today in the pre-market, UAA stock is at $8.98 which means that it has lost 10%.
The company stated that it intends to cut approximately $325 million in costs in 2020, in order to help it endure the crisis. Unfortunately, the company noted, the measures include also temporarily letting go some of its employees who are working in the retail sector. Its adjusted earnings per share recorded a loss of 34 cents, adjusted while its revenue amounted to $930.2 million.
How other companies are surviving during the coronavirus pandemic, you can read here.
Under Armour Revenue Down by 28%, Operating Loss Amounts to $558M in Q1
Wholesale revenue decreased 28 percent to $592 million and direct-to-consumer revenue fell 14% to $284 million, representing 31% of total revenue. North American revenue declined 28% to $609 million and revenue from the company’s international business went down by 12% to $287 million, representing 31% of total revenue. Within the international business, revenue grew by 3% in EMEA, declined 34% in Asia-Pacific and went up by 8% in Latin America. Apparel revenue decreased by 23% to $598 million. Footwear revenue declined 28% to $210 million. Accessories revenue plunged 17% to $68 million.
Gross margin increased 110 basis points to 46.3% compared to the prior year driven primarily by channel mix which benefitted from lower off-price sales and partially offset by the negative impacts from COVID-19 related discounting and changes in foreign currency.
The operating loss was $558 million. Excluding the impact of the restructuring plan and impairments, adjusted operating loss was $122 million. Net loss was $590 million. The adjusted net loss was $152 million.
Diluted loss per share was $1.30. Adjusted diluted loss per share was $0.34.
Difficult Decision of Lay-Offs Due to Coronavirus Outbreak
As the situation was getting worse, the company was obliged to make unpleasant decisions. Under Armour President and CEO Patrik Frisk explained:
“Since mid-March, as the pandemic accelerated dramatically in North America and EMEA and retail store closures ensued, we’ve experienced a significant decline in revenue across all markets. As a result, like so many businesses, we’ve had to make very difficult decisions, including temporarily laying off teammates in our U.S. retail stores and distribution centers along with other actions to ensure we protect Under Armour’s financial stability.”
Analysts gathered around a poll by Refinitiv, estimated previously that the company will report an adjusted net loss of 19 cents per share, on revenue of $949 million. Still, it is pretty hard to compare reported earnings to analyst estimates for Under Armour’s first quarter, as the COVID-19 outbreak is still raging and slamming global economies, making earnings impact difficult to assess.