Under Armour continues to struggle although decline softens

Athletic apparel brand Under Armour posted revenue of US$1.6 billion for the second quarter of FY24, flat versus the prior year and down 1 per cent on a currency-neutral basis.

Revenue in North America dropped 2 per cent to $991 million, offset by a 5 per cent growth in international revenue to $573 million (up 3 per cent currency neutral).

In the international business, revenue increased 9 per cent in Europe Middle East Africa (up 4 per cent currency neutral) and 3 per cent in Asia-Pacific (up 7 per cent currency neutral), but declined 8 per cent in Latin America (down 19 per cent currency neutral).

Neil Saunders, MD of GlobalData, considered it good news for the brand as the decline, which started last quarter, has moderated rather than accelerated.

The company, however, still struggles to gain ground in a more challenging market, he added.

“The dip in North American sales continues to be a concern as this is Under Armour’s largest market by some margin, and is also a region where consumer spending has, generally, held up quite well.”

Wholesale revenue decreased slightly by 1 per cent to $940 million but underlined the caution around retailers not over-committing to inventory even as the holiday season starts to ramp up, Saunders said.

Direct-to-consumer revenue rose 3 per cent to $596 million after the company managed to control the sales experience and tell a story around its merchandise.

Apparel revenue increased 3 per cent to $1.1 billion, but footwear was down 7 per cent to $351 million. Accessories sales rose 3 per cent to $114 million.

The outlook for FY24 remains weak as the company expects revenue to fall 2 to 4 per cent, versus the previous expectation of “flat to up slightly.”

“As we execute against our strategic priorities, we will continue to take a balanced approach to driving profitability in the near term while taking the necessary steps to invest in the talent, systems, and processes to drive the top-line growth that Under Armour is capable of over the long term,” said president and CEO Stephanie Linnartz.

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