Under Armour Inc (NYSE:UA) shares leapt 30% to an 18-month high on the back of results coming in better than expected under new CEO Kevin Plank, despite falling sales.
The sportswear manufacturer upped its guidance for the year to next March, now expecting smaller losses than before.
Revenues in its fiscal second quarter dropped 11% to $1.4 billion, as sales in North America shrank 13% to $863 million and international revenue decreased 6% to $538 million, led by 11% and 13% declines in Asia-Pacific and Latin America.
Wholesale revenue fell 12% to $826 million, with direct-to-consumer down 8% to $550 million, including flat sales from owned and operated stores, but a 21% slump in digital sales due to a decrease in promotional activities.
"Our second quarter fiscal 2025 performance demonstrates that our strategy to reconstitute the Under Armour brand and establish a more premium position in the marketplace is gaining traction," said Plank, who joined at the start of April.
"With better-than-expected results, we are pleased to raise our full-year profitability outlook while simultaneously increasing marketing investments to amplify our brand."
For the full year, revenue is expected to decline at a "low double-digit" percentage overall, with a 14-16% retraction in North America amidst the ongoing reset.
But gross margin is expected to increase by 125 to 150 basis points, up from the prior guidance of 75-100 bps, driven primarily by reduced promotional and discounting activities, with SG&A expenses are expected to increase at a "low-to-mid" digit percentage, if excluding litigation expenses from $434 million agreement in June to settle a 2017 class action lawsuit that accused the US sportswear brand of misleading shareholders about its revenue growth.
Operating losses are expected to be $176-196 million, reduced from the previous $220-240 million guidance, with adjusted operating income expected to be $165-185 million, up from $140-160 million prior guidance.
Adjusted diluted earnings per share were guided to $0.24-0.27, up from $0.19-0.21 before.