Under Armour shares tank after surprise loss, profit warning

Curbs in China tied to COVID-19 led to a 14% fall in income from the Asia-Pacific area.
REUTERS

Beneath Armour forecast full-year revenue under estimates on Friday, because the sportswear maker grapples with larger transportation prices and a success to its enterprise from renewed COVID-19 curbs in China.

Shares of Beneath Armour tumbled over 21% in premarket buying and selling, as the corporate additionally reported a shock loss and bleak gross sales within the first three months of the yr.

Whereas economies around the globe are reopening, a spike in COVID-19 infections in elements of the world equivalent to China has led governments to reinstate strict social restrictions as soon as once more, hurting manufacturing operations and retail gross sales.

The Baltimore-based firm mentioned the curbs led to a 14% fall in income from the Asia-Pacific area within the quarter ended March 31, mirroring a gross sales hunch reported by bigger German rival Adidas, which additionally trimmed its 2022 targets earlier on Friday. 

Beneath Armour generated about 15% of its income from the Asia-Pacific area final yr.

Transport delays and labor shortages have additionally pressured the corporate’s means to get merchandise to shops, forcing it to cancel orders.

Transport delays and labor shortages have additionally pressured the corporate’s means to get merchandise to shops, forcing it to cancel orders.

REUTERS

“Provide chain pressures appear extra a operate of transportation stress and elevated freight prices, somewhat than a difficulty of availability… Provide exists, getting it has been tough,” mentioned BMO Capital Markets analyst Simeon Siegel.

Beneath Armour projected an adjusted per-share revenue between 63 cents and 68 cents for fiscal yr 2023, under Refinitiv estimates of 83 cents.

It sees 5%-7% development in gross sales, whereas analysts count on a 5.4% enhance.

For the interval ended March 31, Beneath Armour reported a lack of $59.6 million, or 13 cents a share, in contrast with a revenue of $77.7 million a yr earlier, or 17 cents a share. 

On an adjusted foundation, the corporate reported a lack of 1 cent per share within the quarter, in contrast with estimates for a 6-cent revenue, whereas web income rose 3% to $1.30 billion, however missed estimates.

“General, the 1Q22 miss and decrease FY23 (revenue forecast) are disappointing and put into query the progress the corporate made final yr on bettering the model and profitability,” Telsey Advisory Group mentioned.