Under Armour has raised its outlook for fiscal 2025 adjusted earnings after the company achieved better-than-expected results in the recently concluded quarter. However, the sportswear company continues to face sales pressures in North America and in the direct-to-consumer segment, where it is working to reduce promotional activities. Projected adjusted earnings for the fiscal year are now estimated to be between $0.24 and $0.27 per share, an increase from the previous estimate of $0.19 to $0.21.
The consensus estimate on Capital IQ stands at $0.23. Meanwhile, the gross margin is anticipated to improve by 125 to 150 basis points, exceeding the earlier guidance of 75 to 100 basis points. In the current fiscal third quarter, Under Armour expects adjusted EPS of $0.02 to $0.04, aligning with the Street’s expectation of $0.03.
The fiscal second quarter, which ended on September 30, saw adjusted earnings reach $0.30 per share, with no comparable results applicable from the previous year. Under GAAP standards, the company's income rose to $0.39 from $0.23, while the Street had projected $0.18. Chief Financial Officer Dave Bergman remarked that the company outperformed its profitability outlook set in August, while acknowledging an 11% dip in revenue to $1.4 billion.
This decrease included a notable 13% decline in North America attributed to diminished full-price wholesale demand and lower sales in the off-price channel. The anticipated consensus for second-quarter revenue was $1.38 billion, showing the scale of the challenges faced. Intraday trading on Thursday saw Under Armour's class A shares jump 32%, following the announcement of a restructuring plan rolled out in May.
"Our work to reconstitute the Under Armour brand continues to gain traction," Bergman stated during the earnings call. "Although we still have much to accomplish, we are optimistic about the initial progress made in this journey." Direct-to-consumer revenue took a hit, declining 8% to $550.3 million, with e-commerce activity down 21% as a result of planned reductions in promotional activities.
Apparel sales dipped 12% to $947.2 million, while footwear revenue fell 11% to $312.8 million. Looking ahead, revenue for fiscal 2025 is still projected to decline by a low double-digit percentage, which includes a fall of 14% to 16% in North America. The revenue for the current quarter is estimated to drop by 10%, kept under pressure from the ongoing challenges in North America and a proactive approach to diminish promotional efforts in the direct-to-consumer business, according to Bergman during the call. Price: 11.54, Change: +2.79, Percent Change: +31.89.