Under Armour Inc. told investors this morning that it is reiterating the company’s previously issued outlook for 2016 “following the recent announcement by The Sports Authority of its commencement of a pre-arranged Chapter 11 bankruptcy restructuring.”
Baltimore-based Under Armour said net revenues for the current fiscal year are pegged to come in at around $4.95 billion, which would be a 25 percent growth rate over 2015. And operating income is expected to grow 23 percent to $503 million, which is in line with the company’s previously announced financial targets.
“The Sports Authority is a long-standing customer of the company, and the company intends to support them as they proceed through their restructuring,” Under Armour said. “The company plans to offset the impact of the bankruptcy on the company’s full-year 2016 results through continued sales to The Sports Authority and sales through other channels and customers.”
“In addition, although the company does not currently believe that the exposure to its receivables from The Sports Authority is materially impacted by these developments, the company will continue to monitor the proceedings and its related impact during the first quarter of 2016,” it added.
Sports Authority filed for Chapter 11 bankruptcy protection earlier this week, and analysts have noted that Dick’s Sporting Goods and Modell’s Sporting Goods could be possible buyers for all or part of the retailer. The Englewood, Colo.-based sporting goods chain has 140 stores and two distribution centers that it plans to either close or sell as part of its restructuring plans.
The retailer currently operates more than 450 stores in 40 states and Puerto Rico. Sports Authority has five regional distribution centers.
Late last month, Under Armour delivered a $1 billion quarter of sales, which surprised Wall Street as investors expected the company to be hurt by warmer weather. Third-quarter sales were $1.17 billion, and passed the FactSet expectations of $1.11 billion in net revenues. The sales represented a 31 percent gain over last year’s $895 million for the same period. Earnings per share came in at 48 cents, which beat the consensus of 46 cents. Net income gained 21 percent to $106 million, which compares to $88 million last year.
Kevin Plank, chairman and chief executive officer of Under Armour, told investors that the company’s “business is more diversified than it’s ever been. We do not let weather play a decisive role in dictating our success.”