Under Armour beats by $0.03, misses on revs; Lowers 2017 outlook
- Reports Q3 (Sep) earnings of $0.22 per share, excluding non-recurring items, $0.03 better thanthe Capital IQ Consensus of $0.19; revenues fell 4.5% year/year to $1.41 bln vs the $1.49 bln Capital IQ Consensus.
- Gross margin declined 160 basis points to 45.9 percent as benefits from changes in foreign currency rates and product costs were more than offset by pricing and other inventory management initiatives, and regional mix.
- Inventory increased 22 percent to $1.2 billion.
- While our international business continues to deliver against our ambition of building a global brand, operational challenges and lower demand in North America resulted in third quarter revenue that was below our expectations. "Based on these issues in our largest market, we believe it is prudent to reduce our sales and earnings outlook for the remainder of 2017."
Updated Fiscal 2017 Outlook
- Net revenue is expected to be up at a low single-digit percentage rate (Prior +9-11%)reflecting lower North American demand and operational challenges due to the implementation of the company's enterprise resource planning system and related service levels.
- Gross margin is expected to be down approximately 220 basis points (Prior down 160 bps) compared to 46.4 percent in 2016 as benefits from product costs and channel mix are more than offset by increased efforts to manage inventory within a highly promotional environment, impacts from the restructuring plan and increasing regional mix.
- Adjusted gross margin is expected to be down approximately 190 basis points (Prior down 120 bps) compared to 46.4 percent in 2016.
- Adjusted diluted earnings per share of $0.18 to $0.20 (Prior $0.37-0.40), Capital IQ consensus $0.37.
- Capital expenditures of approximately $300 million (Prior $350 mln).
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