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Under Armour’s strong footwear sales help drive earnings beat

CEO Patrik Frisk cited higher demand for the athletic apparel maker’s products during the coronavirus pandemic, especially in North America….

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Under Armour on Friday reported earnings and sales that topped estimates, with consumers stocking up on the brand’s sneakers and workout gear during the coronavirus pandemic.

CEO Patrik Frisk cited higher demand for the athletic apparel maker’s products, especially in North America, for the better-than-expected performance.

The company has been working to get back to growth on its home turf. It has been heavily reliant in the past on department stores and discount chains to sell its gear, a strategy that has hurt profitability and diluted the brand’s image compared with competitors including Nike, Adidas and Lululemon. But the pandemic effects — more consumers shopping online and looking for clothes and shoes to workout in — are giving Under Armour a welcomed boost.

The question is, though, how long will it last?

Under Armour offered Wall Street a more upbeat outlook for 2020: It now expects full-year revenue to be down by a high-teen percentage rate. Previously, it had been calling for a drop of 20% to 25% in the second half of the year. Its new outlook, though still a decline, is better than the 25.7% drop that analysts had predicted.

Chief Financial Officer David Bergman added the company expects to report “slightly positive” earnings-per-share growth in 2021.

Its share price was falling by more than 1.5% Friday afternoon, after initially surging more than 8%.

Also Friday, Under Armour said it agreed to sell its MyFitnessPal workout platform to private-equity firm Francisco Partners, in a deal valued at up to $345 million. It acquired the business for $475 million in 2015.

Here’s how the company did during its fiscal third quarter, compared with what analysts were expecting, based on Refinitiv data:

  • Earnings per share: 26 cents, adjusted, vs. 3 cents expected
  • Revenue: $1.43 billion vs. $1.16 billion expected

For the quarter ended Sept. 30, net income shrank to $38.9 million, or 9 cents per share, from $102.3 million, or 23 cents a share, a year earlier. Excluding one-time charges, it earned 26 cents per share, topping expectations for 3 cents, according to Refinitiv estimates.

Revenue was about flat from a year earlier, at $1.43 billion, outpacing estimates for $1.16 billion.

In North America, revenue fell 5% to $963 million, while international sales increased 18% to $433 million.

Apparel sales dropped 6% to $927 million, while footwear revenue surged 19% to $299 million, and accessories revenue jumped 23% to $145 million. The company said the boost in footwear is due in part to the launch of its first-ever, women’s-specific basketball sneaker during the quarter. It also cited strength in the running category.

Under Armour’s direct-to-consumer business, which includes sales from its website and stores, grew 17% year over year. It said its e-commerce business globally grew more than 50% during the quarter.

Increasingly, Under Armour’s strategy has been to sell more directly to customers versus through wholesale partners like department stores. Its wholesale revenue decreased 7% to $830 million during the third quarter.

Over the next few years, Under Armour said, it expects to remove its brand from 2,000 to 3,000 wholesale stores in North America. Frisk said some of these are “larger customers,” while he did not give specific retailers’ names.

In a later interview, Frisk told CNBC’s Sara Eisen that the work the company has been doing for the past three years, to turn its business around, positioned Under Armour well to operate through the pandemic.

“We have seen the consumer return — not at the same levels as before,” he said. “But when they’re in the stores and when they’re shopping … they are converting better.”

Under Armour said it plans to be more profitable this year compared with 2019 as it funnels less inventory through off-price channels. It did caution, though, that profits will be pressured during the fourth quarter due to the competitive promotions around the holidays.

“The pandemic has given Under Armour, and many others, the permission to not grow revenues and instead focus on profits,” BMO Capital Markets analyst Simeon Siegel said. “And I think that is critical.”

Under Armour’s share price as of Thursday’s market close was down about 36% this year, giving the company a market cap of $6.3 billion.

Find the full earnings press release here.

Correction: The year-to-date decline of about 36% was for Under Armour’s share price. An earlier version misstated the category.

Source: https://www.cnbc.com/2020/10/30/under-armour-uaa-reports-q3-2020-earnings-beat.html

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Stitch Fix shares surge as online styling service reports surprise profit

Stitch Fix shares jumped after the online shopping and styling service reported a surprise profit for its fiscal fourth quarter.

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The Stitch Fix application for download in the Apple App Store on a smartphone arranged in Hastings-on-Hudson, New York, U.S., on Saturday, June 5, 2021. Stitch Fix Inc. is scheduled to release earning on June 7.

Tiffany Hagler-Geard | Bloomberg | Getty Images

Stitch Fix shares jumped 14% in extended trading Tuesday after the online shopping and styling service reported a surprise profit for its fiscal fourth quarter.

Sales for the three-month period ended July 31 also came in higher than analysts were expecting, thanks to outsized growth in Stitch Fix’s women’s and kids’ categories. Menswear has been growing more slowly, the company said.

Consumers have been splurging on new outfits in recent months, as many head back to school and return to social gatherings. Some have also citied the need for new clothes after either gaining or losing weight during the Covid pandemic.

Here’s how Stitch Fix did compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

  • Earnings per share: 19 cents vs. a loss of 13 cents expected
  • Revenue: $571.2 million vs. $548 million expected

Net income attributable to shareholders was $28 million, or 19 cents per share, in the latest period. A year ago, it posted a net loss of $44.5 million, or 44 cents a share. Analysts had been looking for the company to book a loss of 13 cents per share.

Revenue grew to $571.2 million from $443.4 million a year earlier. That was better than analysts’ expectations for $548 million.

Stitch Fix reported nearly 4.2 million active clients, up 18% from a year earlier. The company said net revenue per active client was $505, surpassing the $500 threshold for the first time ever. Customers have been purchasing more items to keep at home, Stitch Fix said, as they have more brands and price points to choose from.

Stitch Fix defines active clients as people who either ordered a “Fix” subscription or bought an item directly from its website in the preceding 52 weeks from the final day of the quarter.

The company also said it had its lowest ever churn rate at the end of the period, meaning its customers are sticking around.

Last month, Stitch Fix finally opened up its direct-buy option, which is now known as “Freestyle,” to the public. This allows people to shop Stitch Fix for individual items of clothing, without needing to sign up for a subscription.

CEO Elizabeth Spaulding said this should help Stitch Fix grow its addressable market in the year ahead. The company’s next initiative will be to market and raise broader awareness around the offering, she said. Stitch Fix is preparing to roll out a national advertising campaign on the debut.

Early indications are that “Freestyle” is meaningfully accretive to the company’s revenue per active client metric, Spaulding told analysts on a conference call.

“Clients have agency, flexibility and choice while also experiencing a highly personalized shopping experience,” Spaulding said.

For its fiscal first quarter, Stitch Fix said it sees sales in a range of $560 million to $575 million. That’s below analysts’ expectations for $588 million.

For the upcoming fiscal year, Stitch Fix anticipates sales rising 15% or more from the prior year. Analysts polled by Refinitiv had been looking for an 18% increase.

While the entire retail industry is working through supply chain complications, Stitch Fix said it is seeing a small impact, but nothing that will hurt the business in the fall and winter months. The company said it is less reliant on Vietnam, where manufacturing has largely come to a standstill due to ongoing pandemic lockdowns in the region.

As of Tuesday’s market close, Stitch Fix shares have fallen nearly 39% this year. The company has a market cap of $3.8 billion.

Find the full press release from Stitch Fix here.

Sales for the three-month period ended July 31 also came in higher than analysts were expecting, thanks to outsized growth in Stitch Fix’s women’s and kids’ categories. Menswear has been growing more slowly, the company said.

Source: https://www.cnbc.com/2021/09/21/stitch-fix-sfix-q4-2021-earnings.html

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Earnings

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CNBC International is the world leader for news on business, technology, China, trade, oil prices, the Middle East and markets.

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