Under Armour’s Earnings Met Expectations



A look at Under Armour’s 4Q17 bottom line

Under Armour (UAA), which released its 4Q17 results on February 13, 2018, posted a loss of $88 million after including restructuring charges and the one-time impact of the new tax reform legislation.

Excluding these non-recurring charges, the adjusted net loss was $1 million, and adjusted earnings were $0 for the quarter. That compares to $0.23 in 4Q16. However, its bottom-line numbers were in line with Wall Street’s expectations.

For fiscal 2017, the company recorded adjusted net income of $87 million, while its adjusted diluted EPS (earnings per share) was $0.19, a 58% fall YoY (year-over-year).

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How sportswear players have performed recently

Sportswear players have had a good start to the earnings season. Skechers (SKX) and Columbia Sportswear (COLM), which both reported quarterly results on February 8, 2018, delivered results that were better than Wall Street expectations. COLM’s quarterly EPS was $1.31, which was $0.16 more than expectations. Skechers’s EPS was $0.21, which was $0.08 more than the consensus forecast.

Gross margin plunges again

In 4Q17, Under Armour’s gross margin declined for the 11th consecutive quarter. After being adjusted for restructuring charges, its 4Q17 gross margin fell 140 basis points to 43.3% of sales.

Its gross margin for 2017 fell 140 basis points to 45% of sales. The fall was primarily driven by the company’s inventory management initiatives and increased promotional activities.

ETF investors seeking to add exposure to Under Armour can consider the Guggenheim S&P 500 Equal Weight Consumer Discretionary ETF (RCD), which invests 0.8% of its portfolio in the company.


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