• Revenue: Declined 6% to $1.4 billion, better than the expected 10% decline.
• North America Revenue: Decreased 8%, mainly due to a decline in DTC business.
• EMEA Revenue: Increased 5% (3% currency-neutral), with growth in DTC and full-price wholesale.
• APAC Revenue: Fell 5% (6% currency-neutral) due to a competitive and promotional landscape.
• Latin America Revenue: Declined 16% (9% currency-neutral), mainly due to lower distributor sales.
• Gross Margin: Increased 240 basis points to 47.5%, driven by supply chain benefits and reduced discounting.
• SG&A Expenses: Rose 6% to $638 million, with adjusted SG&A at $606 million, up 5%.
• Operating Income: $14 million; adjusted operating income was $60 million.
• Adjusted Diluted EPS: $0.08 for the quarter.
• Inventory: Flat at $1.1 billion compared to last year.
• Cash Balance: $727 million at the end of the third quarter.
• Stock Repurchase: $25 million of Class C stock, retiring 2.8 million shares.
• Fiscal '25 Outlook: Revenue expected to decline approximately 10%; adjusted diluted EPS expected to be $0.28 to $0.30.

• Warning! GuruFocus has detected 5 Warning Sign with EZPW.

Release Date: February 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Under Armour Inc (NYSE:UAA) exceeded expectations for the third quarter, with revenue and gross margin surpassing forecasts.
• The company raised its full-year outlook, indicating confidence in its strategic repositioning efforts.
• Significant progress was made in enhancing product offerings, particularly in athletic performance and sportswear.
• The launch of new products, such as the Curry brand's Fox 1 shoe and the SlipSpeed Echo footwear, has generated positive buzz.
• Under Armour Inc (NYSE:UAA) is seeing growth in its loyalty program, with 4 million new members added in North America, demonstrating higher repurchase rates and revenue per consumer.

Negative Points

• North America experienced an 8% revenue decline, primarily due to decreased direct-to-consumer business and lower eCommerce sales.
• APAC revenue fell by 5%, with challenges arising from a competitive market and increased discounting.
• Latin America saw a 16% revenue decline, mainly due to lower distributor sales.
• The company is facing headwinds in the fourth quarter, including a softer order book and pressures in the APAC region.
• SG&A expenses rose by 6%, driven by higher marketing expenses and incentive compensation, partially offset by cost management efforts.

Q & A Highlights

Q: Kevin, as you enter this new chapter of exciting marketing and product, could you elaborate on balancing storytelling while achieving more by doing less? Also, any insights on the percentage of eCommerce still on discounts and the timeline for the D2C reset? A: Kevin Plank, CEO: Achieving more by doing less is a broader metric at Under Armour, focusing on growth by constraint. This involves empowering teams and creating greater accountability. We're being more intentional with our brand and product offerings, like the new SlipSpeed Echo. David Bergman, CFO: We've made significant progress in reducing eCommerce discounts, especially in North America, but there's still work to do. We're also focusing on EMEA and APAC to further reduce discounts.

Q: Are you beginning to see results from your brand strengthening strategies? If not, when do you anticipate this change will start? Also, what's happening in APAC? A: Kevin Plank, CEO: The brand is inflecting before the business, evidenced by increased interest from retail partners and talent. We're building pricing power, aiming for consumers to value us beyond price. In APAC, we're addressing challenges with leadership and resources, drawing from successful strategies in EMEA and North America.

Q: How is the North America reset working, and do you expect growth in FY26? A: Kevin Plank, CEO: We're in a better position now, reducing promotions and focusing on growth. The new product engine will start paying off in fall '25, and we're aligning around growth. Double-digit operating margins are a target, and we're taking steps to ensure long-term success.

Q: Can you discuss the impact of the order book on Q4 and the phone ringing more? A: David Bergman, CFO: The order book is softer, with additional pressure from foreign currency and APAC challenges. Kevin Plank, CEO: There's excitement around our fall '25 products, and we're receiving interest from boutique players. We're focusing on better and best product categories and distribution.

Q: Can you elaborate on the top-line beat in North America and any plans to exit lower-quality distribution in FY26? A: David Bergman, CFO: The top-line beat was driven by DTC, with reduced promotions. We're focusing on better and best product categories and distribution, but maintaining presence in good-level accounts. We're looking for opportunities in premium touchpoints.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.