​Under Armour Reports First Quarter Losses Amid Decline In Sales

Baltimore MD

11 May, 2020

2:02 PM

Description

BALTIMORE — Baltimore-based Under Armour said it's taking steps to reduce its spending as it reports revenue loss and store closures caused by the new coronavirus. The athletic wear company in March announced its revenue declined 23 percent to $930 million in the first quarter. The company reported a net loss of $590 million, or $1.30 per share. In a release, Under Armour said North America revenue decreased 28 percent to $609 million and revenue from international business declined 12 percent to $287 million. Wholesale revenue decreased by 28 percent to $592 million and direct-to-consumer revenue declined 14 percent to $284 million, the company said. Under Armour's apparel revenue decreased 23 percent to $598 million, footwear revenue dropped 28 percent to $210 million, and accessories revenue decreased 17 percent to $68 million. Meanwhile, selling, general and administrative expenses rose 8 percent to $533 million. The company said the increase was driven primarily by legal expenses and more marketing activities. Under Armour also reported restructuring and impairment charges of $436 million. The company lost $558 million to operating expenses in the first quarter but plans to cut originally planned 2020 operating expenses by $325 million. Under Armour ended the quarter with cash and cash equivalents of $959 million, it said. Of that, some $600 million is related to money the company borrowed. Under Armour said it borrowed $700 million under a revolving credit facility in March to preserve liquidity. In a statement, Under Armour president and CEO Patrik Frisk said the company was performing to plan in January and February 2020. "Since mid-March, as the pandemic accelerated dramatically in North America and EMEA (Europe, the Middle East and Africa) and retail store closures ensued, we've experienced a significant decline in revenue across all markets." Frisk said. "As a result, like so many businesses, we've had to make very difficult decisions, including temporarily laying off teammates in our U.S. retail stores and distribution centers along with other actions to ensure we protect Under Armour's financial stability." The company said it is taking steps to ensure its longevity throughout the remainder of the pandemic including limiting marketing, reducing incentive pay, instituting temporary layoffs and tightening hiring and travel spending.