Under Armour president and CEO Stephanie Linnartz says the company’s profitability in Q2 (the period ending 30 September 2023) “exceeded” expectations.
Gross profit was $752m in the second quarter, which was 48% of net revenues. This is compared to the same period in 2022 when it was $713.8m and 45.4% of net revenues.
The operating income went up from $119.4m last year to $145.8m, while the net income rose by 7% to $109.6m from last year’s $86.9m.
The wholesale revenue decreased by 0.9% to $940m from 948m, while direct-to-consumer revenue increased 3.2% to $596m from $577m which has been attributed to a 2% increase in eCommerce revenue.
Geographically, North America and Latin America saw a downward trend with their revenue falling 2% and 7.7% respectively. Although, revenue increased 9.3% in EMEA and 2.8% in Asia-Pacific.
Under Armour 2024 outlook
Linnartz explains that since the brand performed better than expected in the second quarter, Under Armour is maintaining its fiscal 2024 operating income and EPS outlook.
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However, the brand has lowered its revenue expectations primarily in response to challenges in North America during the back half of the year.
She explains: “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.”
In August, Under Armour reported a 2% decrease in revenue to $1.3bn in the first quarter of the fiscal year 2024 with a GlobalData retail analyst blaming its reliance on weak wholesale accounts and its lack of brand focus.
At that time GlobalData retail analyst Neil Saunders noted the drop in wholesale was a consequence of Under Armour selling through “troubled retailers such as Kohl’s” whose declining footfalls are impacting wholesale orders.
He added at the time: “The poor standards and lack of operational discipline at those retailers means Under Armour products are not displayed well and are therefore overlooked by shoppers. Third, many of the demographics at these retailers are slightly more impacted by inflation and have cut back more severely. All of this adds up to lower volumes, which means fewer wholesale orders for Under Armour.”