Lower demand from retailers caused Under Armour Inc.’s fourth-quarter profits to fall by more than 50 percent, but it still met Wall Street’s diminished expectations.
This story first appeared in the January 30, 2009 issue of WWD. Subscribe Today.
For the quarter ended Dec. 31, the Baltimore-based athletic apparel maker posted net income of $8.3 million, or 17 cents a diluted share, a 50.1 percent fall from a year ago when profit totaled $16.9 million, or 34 cents a share. Sales in the fourth quarter rose 2.5 percent to $179.3 million from $174.9 million last year.
The results were in line with the lowered expectations of analysts polled by Yahoo Finance who, on average, expected EPS of 17 cents. Earlier this month, Under Armour warned that profits would be in the range of 16 to 18 cents a share, lower than previously expected.
The company said a slowdown in wholesale orders and weaker foreign currency exchange rates combined with other factors to hurt fourth-quarter profits.
“In the context of a very difficult retail environment, what happened at retail for Under Armour during the back half of 2008 was very positive from a brand perspective,” said chairman and chief executive officer Kevin Plank on a call with investors. He said the company had been able to preserve its brand and pricing integrity in a retail environment dominated by heavy promotions.
For the full year, the company recorded a 27.3 percent slip in profits to $38.2 million, or 77 cents a share, compared with $52.6 million, or $1.05 a share, in 2007. Sales in 2008 rose 19.5 percent to $725.2 million from $606.6 million a year ago.
The company added that it entered into a three-year $180 million revolving credit facility with PNC Bank, replacing the prior $100 million agreement.
Shares of Under Armour closed Thursday’s trading session at $19, down 44 cents, or 2.3 percent.