Under Armour sees annual revenue above expectations, to sell MyFitnessPal
October 30, 2020
(Reuters) – Under Armour Inc <UA.N> <UAA.N> on Friday forecast annual revenue above Wall Street expectations as a pandemic-driven trend of outdoor exercise resulted in a surge in demand for running shoes and other fitness gear.
The Baltimore-based company’s shares rose 7% in premarket trading, after it also decided to sell its MyFitnessPal fitness tracking platform for $345 million to private equity firm Francisco Partners.
As gym attendance drops due to the chance of the coronavirus spreading more in closed spaces, more people have opted to train in their homes, go running or biking outdoors, driving up sales of Under Armour’s HOVR line of training shoes as well as running shorts and t-shirts.
The company’s footwear revenue rose 19% to nearly $300 million in the third quarter. Larger rival Nike Inc <NKE.N> had posted a 4% rise in footwear revenue in its last reported quarter.
Like Nike, a large chunk of Under Armour’s new demand is coming from its website and app, which pushed its direct-to-consumer business up 17%.
Overall quarterly revenue was largely flat at $1.43 billion for the quarter ended Sept. 30, but beat analysts’ average estimates of $1.16 billion.
Excluding certain items, Under Armour earned 26 cents per share, beating expectations of 3 cents per share.
The company said the sale of MyFitnessPal, which it bought in 2015 for $475 million, gives it more investment firepower and simplifies its larger digital fitness business.
It forecast full-year revenue to fall in the high-teen percentage, compared with analysts’ average estimate of a 25.7% drop, according to IBES data from Refinitiv.
The company said it expects a annual adjusted loss of 47 cents per share to 49 cents per share, smaller than the 72 cents per share loss estimated by analysts.
(Reporting by Uday Sampath in Bengaluru; Editing by Saumyadeb Chakrabarty and Arun Koyyur)