Kevin Plank is still in deep reset mode at Under Armour Inc. — but, as usual, Wall Street is finding it hard to be patient.
Plank, the driving force behind the company, said it was hitting its marks or better. Still, second-quarter sales were impacted by declines as the brand gets back into shape for the long run.
And investors sent shares of the company down 11 percent to $4.78 in premarket trading Friday.
“We delivered against our revenue expectation and exceeded our operating income outlook,” Plank said in a statement. “As we progress in this transformation, we are driving greater efficiency across our business, sharpening our product offering and amplifying global marketing to strengthen our brand and improve financial performance.”
Revenues for the quarter ended Sept. 30 fell 7 percent to $1.2 billion, with the declines felt evenly between North America and the international division. Analysts had expected the top line to perform worse, with an 8.3 percent decline, according to Yahoo.
By category, apparel revenues fell 6 percent to $880 million, while footwear declined 11 percent to $234 million and accessories were off 7 percent to $105 million.
Net losses for the quarter narrowed to $425,000 from $18.8 million a year earlier. On an adjusted basis, Under Armour hit break even.
The company has logged $280 million in restructuring costs so far and expects the total to approach $305 million when the efforts wrap up at the end of the year.
For the full year, revenues are still slated to fall by midsingle digits.
But Under Armour said its gross margin would now only rise by 170 to 220 basis points, and not the 220 to 270 basis point increase previously forecast. About 150 basis points of the expected improvement were tied to tariff refunds.
“Excluding this benefit, the company continues to expect gross margin expansion driven by pricing actions, lower discounting and a more favorable channel and product mix, partially offset by increased supply chain headwinds related to the ongoing conflict in the Middle East and unfavorable foreign exchange impacts,” Under Armour said.
Adjusted operating profits are still seen coming in at the $140 million to $160 million range, with $70 million of that coming from the tariff refunds.
The EPS forecast nudged up some, with Under Armour now seeing a bottom line that ranges from a loss of 2 cents to earnings of 2 cents. Before, losses were seen ranging from 1 cent to 5 cents.
