Patrik Frisk nonetheless has one thing to show to buyers.
Shares of Under Armour Inc., which Frisk leads as chief executive officer, dropped 26 p.c to $9.84 on Friday, after the corporate posted a small loss in the latest quarter and projected annual earnings that fell in need of analysts estimates.
Like many different fashion corporations, Under Armour has been retooling lately and Frisk argued that the corporate has grown a lot stronger and more healthy and is able to take off — when the world will get again to regular.
However regular nonetheless appears a methods off.
Frisk acknowledged on a convention name with analysts on Friday that outcomes for the latest quarter “came in lighter than we had expected due to ongoing supply challenges and emerging COVID-19 impact on our Asia Pacific business.”
And the dynamic isn’t going wherever quickly.
“These trends, which we believe to be temporary, are also expected to impact how fiscal ’23 is shaping up,” the CEO mentioned.
Throughout the “transitional” quarter, which ended March 31 and units the corporate’s new fiscal calendar, web losses tallied $59.6 million, or 13 cents a diluted share, and in contrast with earnings of $77.8 million, or 17 cents, a 12 months earlier.
Gross margins decreased 350 foundation factors to 46.5 p.c of gross sales, pushed largely by increased freight bills amid the worldwide provide chain again up, whereas increased bills and restructuring and impairment fees additionally weighed on the quarter.
On an adjusted foundation, the corporate mentioned losses had been $3 million, or 1 cent a share.
Revenues inched up 3.5 p.c to $1.3 billion from $1.26 billion a 12 months in the past. Wholesale gross sales grew 4 p.c to $829 million because the model’s direct-to-consumer revenues elevated to $441 million. Attire revenues elevated 8 p.c to $877 million whereas footwear slipped 4 p.c to $297 million and equipment fell 18 p.c to $97 million.
Frisk reaffirmed confidence within the firm’s long-term progress potential regardless of the “near-term headwinds.”
“The engine that makes this model work most efficiently is profitable top-line growth,” he mentioned “That is my number-one precedence as CEO. We consider our direct-to-consumer, footwear, girls’s and worldwide companies will drive this progress over the long run.
“Under Armour is a growth company with an incredible opportunity ahead of us,” he mentioned. “Our fundamentals are strong. Our underlying brand strength is improving, and our confidence remains unchanged.”
The corporate, which is now within the midst of its fiscal first quarter, gave an outlook that it mentioned took into consideration “current visibility, including ongoing supply chain challenges, COVID-19 uncertainty and inflationary trends.”
Revenues this 12 months are anticipated to rise 5 p.c to 7 p.c with gross margins down 150 to 200 foundation factors. Adjusted earnings per share are slated to return in at 63 cents to 68 cents, with the highest finish of that vary being on par with the comparable interval a 12 months earlier.
Wall Road had 78 cents penciled in.
However Under Armour nonetheless has its believers — and it definitely has firm relating to navigating a tricky panorama. Kate Fitzsimons, a Wells Fargo analyst, mentioned the Under Armour confronted a “tough set up as numbers come down,” however that its “underlying brand health” was bettering.
“While we expect Under Armour won’t be alone in terms of negative revision led by macro headwinds (China, supply chain, elevated freight) especially in the fiscal first quarter, we are encouraged that Under Armour’s brand health remains on stronger footing headed into fiscal 2023.”
Fitzsimons additionally famous that the corporate has larger visibility in its wholesale enterprise going ahead and is working with “discipline” on stock and bills.
And Frisk is maintaining a minimum of one eye on the horizon.
“When I look at it longer term, we will start to build back inventory in the back half of the year,” the CEO mentioned. “And we’ll start to get healthier from a revenue growth perspective as well in the back half of the year as we accelerate out of this temporary situation.”
MORE FROM WWD: