Down 40% in the last five years, a lot of investors had all but given up on Under Armour (NYSE: UAA).
However, following its impressive Q1 earnings report, could there be signs of a turnaround?
How’d Under Armour do?
For years, Under Armour was touted as the challenger to Nike’s throne in the sports apparel industry. Alas, time was not so kind, and the company languished in its rising unpopularity among the all-important teenage audiences of America.
Then, along came now CEO Patrik Frisk and his ambitious plans to turn things around. Taking over in January 2020, these plans were quickly thrown into disarray by a certain well-known virus. In Q1 2020, Under Armour sales tumbled a crippling 20% as stores shut worldwide, and its turnaround plans suddenly looked far out of reach.
Fast forward one year and it’s a very different story:
- EPS: $0.16 vs. $0.03 expected.
- Revenue: $1.26 billion vs. $1.13 billion expected
- Net income: $77.8 million vs. a loss of $590 million a year ago.
- Growth: 32% sales growth in North America, 58% internationally.
- Online sales: 69%
- Predicted Q2 sales growth: 70%
Frisk is finally enacting his plans and has specifically cited the company’s reduced reliance on narrow-margin sales items as widening its profit margins, which will allow the company to modernize its designs and marketing strategies. What’s more, the company has settled an ongoing SEC investigation related to misleading investors between 2015 – 2016 for ‘just’ $9 million.
With that monkey off its back and its fortunes on the rise, it will be a very interesting year for Under Armour, which has a long way to go before it can challenge Nike once more. Time will tell…
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Editor at MyWallSt
Jamie is the Content Editor here at MyWallSt. His favorite stock is Apple, which is also the first stock he ever bought. Jamie is not only a big fan of its products, but he believes that the tech giant has a whole lot more to give the world, and hasn't even scraped the surface of its potential.