Things are still a little shaky for Under Armour Inc., which posted its first quarterly net loss since going public in 2005.
But results weren’t as bad as Wall Street feared and the stock jumped 9.2 percent to $19.83 in early trading.
During the first quarter of 2017, the activewear brand saw its overall revenue grow by 7 percent to $1.1 billion but also posted a net loss of $2 million, compared with a net income of $104.9 million during the fourth quarter of last year. Analysts were expecting a loss of 4 cents a share, so investors were heartened to see a deficit of just 1 cent.
While the company attributed the revenue growth to a 4 percent bump in wholesale revenue to $773 million and a 13 percent increase in direct-to-consumer revenue to $302 million, its income was impacted by interest expenses and an increased effective tax rate.
David Bergman, Under Armour’s senior vice president of corporate finance said during a call with analysts that the company’s effective tax rate “approached 200 percent from 42 percent due to discrete items taken in certain foreign markets” as well as the use of new accounting rules “related to the tax treatment of equity compensation.”
Chief executive officer Kevin Plank said the company is “off to a solid start” and that “2017 is the year we’re empowering Under Armour to become a single, more agile, strong and smarter company. Our first quarter marks a good start to this journey.”
“Our strategy is about more than this quarter or the next, and while parts of the broader environment remain uneven, we feel very good about the evolution of our brand strength, relationships with consumers around the world and our ability to gain share in key markets and categories,” Plank said. “Whether analyzing the next three, five or 10 years by product type, gender, category, channel or geography, we are underpenetrated comparatively by any measure, market share, mind share and potential.”
As for financial expectations over the rest of the year, the company’s outlook is unchanged from earlier this year, with net revenues expected to grow 11 percent to 12 percent over the full year to reach nearly $5.4 billion and operating income expected to hit $320 million.