20 Jul

What Will Drive Under Armour in Fiscal 2018?

WRITTEN BY Sonya Bells FEATURED IN Pre-Release Earnings Reports

Expectations from UAA’s second quarter

Under Armour’s (UAA) total sales improved 6.1% YoY (year-over-year) in the first quarter of 2018 to $1.18 billion. UAA’s management expects the same kind of growth for the second quarter. The company will report results for the second quarter on July 26. Wall Street, in comparison, has projected a 5.5% YoY increase in sales to $1.15 billion for the quarter.

What Will Drive Under Armour in Fiscal 2018?

Full-year outlook

For full fiscal 2018, the management has projected a low-single-digit increase in total sales. North America sales are projected to continue to decline at a mid-single digit rate. International business is once again expected to be a growth engine. International sales are expected to jump at a 25% plus growth rate.

Under Armour’s international business has provided the necessary cushioning to the company during these tough times. Overseas sales improved an impressive 46% during fiscal 2017 and another 27% during the first quarter of 2018. EMEA, Asia Pacific, and Latin America markets have remained particularly strong. The company derives close to 25% of its total sales from overseas markets.

Channel-wise analysis

Under Armour derives about 65% of its top line from the wholesale channel. However, the company has faced continued weakness in this channel. The wholesale business fell 3% during fiscal 2017, even as the direct-to-consumer channel stood strong and improved 14% during the year.

Weakness in wholesale is likely to continue into fiscal 2018 and is expected to offset the mid-to-high-single-digit growth in the DTC business.

Move on to the next section for a look at UAA’s profitability.

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