Under Armour Stock Jumps with Restructuring in Full Swing

Under Armour (UAA) shares popped intraday Thursday following the company’s first-quarter fiscal 2025 results, its first since announcing a substantial restructuring plan.

Key Takeaways

• Under Armour is “encouraged by early progress” in its restructuring process.
• First-quarter revenue fell 10% year-over-year but beat analysts’ consensus estimate.
• Fiscal 2025 revenue is expected to fall by a low-double-digit percentage rate.

The athletic apparel retailer said it has recognized $34 million of the estimated $70 to $90 million in charges related to the restructuring, with the remainder expected to occur in fiscal 2025. Notably, the process has included a drawback in promotional material.

CEO ‘Encouraged by Early Progress’ in Restructuring Process

“We are encouraged by early progress in our efforts to reconstitute a premium positioning for the Under Armour brand and pleased with our first quarter fiscal 2025 results that were ahead of expectations,” Chief Executive Officer (CEO) Kevin Plank said.

Under Armour reported revenue of $1.18 billion, down 10% year-over-year but above analysts’ expectations of $1.14 billion, per Visible Alpha. North America revenue decreased 14% to $709.3 million.

It posted a per-share loss of 70 cents, far wider than expectations of a loss of 27 cents per share. However, the company posted an adjusted profit of 1 cent per share, while analysts expected an adjusted loss of 8 cents per share.

Under Armour said it expects fiscal 2025 revenue to fall at a low double-digit percentage rate, in line with expectations. It sees earnings swinging to a loss between 53 cents and 56 cents per share, far wider than expectations of a 4-cent loss per share, and an adjusted per-share profit of 19 cents to 22 cents, in line with expectations of 20 cents.

Shares of Under Armour surged nearly 20% to $7.74 as of 12:10 p.m. ET Thursday. Still, they are down about 12% in 2024.

Overall, Under Armour’s first-quarter fiscal 2025 results have shown promise amidst its ongoing restructuring efforts. The company’s revenue of $1.18 billion, though down 10% year-over-year, exceeded analysts’ expectations. This positive outcome can be attributed to the company’s focus on reconstituting a premium positioning for the Under Armour brand.

Under Armour’s CEO, Kevin Plank, expressed his satisfaction with the early progress made in the restructuring process. He emphasized the company’s commitment to regaining a strong market position and highlighted the first-quarter fiscal 2025 results as evidence of their efforts paying off.

While the revenue decline of 10% is a cause for concern, it is important to note that the North America revenue decrease of 14% contributed significantly to this decline. However, the company’s adjusted profit of 1 cent per share, surpassing analysts’ expectations of an adjusted loss of 8 cents per share, indicates that Under Armour has managed to mitigate some of the negative impacts of the restructuring process.

Looking ahead, Under Armour anticipates a low double-digit percentage rate decrease in fiscal 2025 revenue, aligning with market expectations. The company also projects a wider loss per share between 53 cents and 56 cents, compared to the expected 4-cent loss per share. However, the adjusted per-share profit of 19 cents to 22 cents falls in line with the projected 20 cents, providing some stability in earnings.

The positive reception of Under Armour’s first-quarter fiscal 2025 results is evident in the significant surge of its stock, with shares rising nearly 20% to $7.74. This boost in investor confidence reflects the market’s recognition of the progress made by the company in its restructuring efforts.

Despite the recent stock surge, it is important to note that Under Armour’s shares are still down approximately 12% in 2024. This indicates that the company has room for improvement and further growth as it continues to navigate the challenges posed by the restructuring process.

In conclusion, Under Armour’s first-quarter fiscal 2025 results demonstrate the company’s commitment to its restructuring plan and its ability to surpass market expectations. With a focus on reestablishing a premium brand positioning and a positive outlook for future earnings, Under Armour is poised for continued growth and success in the athletic apparel industry.

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