US-based sportswear brand Under Armour has unveiled better than expected first quarter revenue growth of 6 per cent to US$1.2 billion, as weakness in its home market was offset by growing momentum overseas.
Under Armour booked a net loss of $30 million in the first quarter, although excluding $37 million in costs associated with its restructuring plan net income was $1 million.
North American revenue declined by 1 per cent in currency corrected terms while its international business saw sales increase by 27 per cent, up 19 per cent in currency corrected terms.
Asia Pacific was the strongest individual operating region for the business, with sales increasing by 28 per cent, currency corrected.
Under Armour chairman and chief executive Kevin Plank affirmed the company’s $20-30 million operating income guidance for 2018 on Tuesday in the US.
“Our first quarter results demonstrate measured progress against our focus on operational excellence and becoming a better company,” Plank said.
“As we continue to build our global brand by delivering innovative performance products to our athletes, amplifying our story, further strengthening our go-to-market process, and leveraging our systems to create even deeper consumer connections – we remain confident in our ability to deliver on our full year targets.”
GlobalData managing director Neil Saunders said that while there are some positives in the latest result the figures still give the impression that the business has “run out of steam”.
“Overall revenue looks good enough with a 5.8 per cent increase in sales,” he said.
“However, all of this comes from newer markets where Under Armour is buying growth through expansion. There is nothing wrong with this strategy, but it comes with costs attached – which means the contribution to the bottom line is less than impressive.”
More to come.