Under Armour (UAA) plans to announce its first-quarter results on May 2. Under Armour delivered better-than-expected earnings in three out of four quarters in 2018 and was in line with expectations in one quarter. Under Armour’s revenue exceeded analysts’ forecast in all the quarters of 2018. Analysts expect break-even EPS in the first quarter and revenue to decline 0.3% to $1.18 billion.
The company expects diluted loss per share of $0.01 and revenue to be flat to slightly down in the first quarter of 2019. Under Armour expects its first-quarter revenue to be adversely impacted by continued weakness in its revenue from the North America region. Under Armour expects its first-quarter gross margin to expand about 20 to 30 basis points compared to the adjusted gross margin in the first quarter of 2018. The company expects its first-quarter gross margin to benefit from a favorable regional mix and product cost improvements, partially offset by an unfavorable channel mix resulting from the lower proportion of direct-to-consumer sales and higher off-price channel sales.
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Weakness in North America region
Under Armour’s revenue grew 4.1% to $5.2 billion in 2018 as higher revenue from international segments and Connected Fitness was partially offset by lower revenue in the North America segment. Under Armour’s revenue from the North America segment accounted for 72% of the overall revenue in 2018. The revenue from the North America region declined 1.8% to $3.7 billion due to lower demand. Intense competition in the footwear and athletic apparel space is impacting Under Armour’s North America business.
The company expects its revenue from the North America segment to be flat in 2019. Under Armour expects its overall revenue growth in the range of 3% to 4% in 2019 driven by low double-digit percentage growth in international sales. The company has forecasted its 2019 EPS to be in the range of $0.31 to $0.33.