Under Armour Inc (NYSE:UA) shares stumbled early on Tuesday as the sportswear maker reported yet another quarter of declines in its core North America business.
The Baltimore-based company, along with most of its peers, has struggled of late in the US and Canada, which accounts for more than three-quarters of total revenue.
Shares dropped to eight-year lows back in October as Under Armour blamed a “difficult backdrop” in its home market for flagging sales, and North America revenues fell 1% again in the first quarter of 2018.
Under Armour’s stock slipped 2.9% to US$17.25 in pre-market trading on Tuesday.
READ: Under Armour jumps on fourth-quarter sales beat
A strong showing overseas helped the company, whose kit is worn by basketball star Steph Curry and golf’s Jordan Spieth, to beat Wall Street estimates though.
Sales in the international business soared by 19% on a constant currency basis, with a particularly robust performance in the Asia Pacific region.
Total revenue rose 4% on a constant currency basis to US$1.2bn, ahead of Wall Street forecasts of US$1.12.
Under Armour recognised a US$37mln charge associated with its ongoing restructuring plan which it introduced last summer as it transitions from a fast-growing business to a more mature one.
Net loss for the quarter was US$30mln. Excluding the impact of the restructuring plan, adjusted net income was US$1mln.
Adjusted earnings beat the Street
Diluted loss per share for the period was US$0.07. The company had breakeven adjusted earnings per share, better than the US$0.05 loss per share analysts had pencilled in.
“Our first quarter results demonstrate measured progress against our focus on operational excellence and becoming a better company," said Under Armour Chairman and Chief Executive Kevin Plank.
“As we continue to build our global brand by delivering innovative performance products to our athletes, amplifying our story, further strengthening our go-to-market process, and leveraging our systems to create even deeper consumer connections - we remain confident in our ability to deliver on our full year targets.”
Price cutting to try to shift some of its inventory meant the gross margin tumbled 120 basis points to 44.2% in the quarter, although Under Armour said it expects less promotional activity throughout the rest of the year so margins should pick up again.
As for the rest of its outlook, the sneaker maker kept everything unchanged.
It still expects to report “low single-digit” growth in net revenue, with the international business accounting for more than 25% of sales by the end of the year.
Operating income, including the costs of its restructuring efforts, is expected to reach US$20-30mln. Adjusted earnings per share is forecast to be in the range of US$0.14 and US$0.19.