Retail Insight Network

Daily Newsletter

10 August 2023

Daily Newsletter

Under Armour’s revenue declined by 2% in Q1 FY24

The company expects an operating income in the range of $310m to $330m in FY24.

Sportswear retailer Under Armour has reported total revenue of $1.3bn in the first quarter (Q1) of fiscal year (FY) 2024, down by 2% from the same period in FY23.

The company’s wholesale revenue dropped 6% to $742m in Q1 FY24. Direct-to-consumer revenue increased by 4% to $544m, driven by a 6% and 3% growth in e-commerce and owned-and-operated store revenue, respectively.

Regionally, North America saw a 9% revenue fall during the period while international revenue rose 12% to $485m.

The apparel category reported a revenue drop of 5% in the quarter. Revenues for footwear and accessories were up by 5% and 1%, respectively, over the quarter.

For the period ending 30 June 2023, the gross margin of Under Armour declined by 60 basis points (bps) to 46.1%.

The company delivered an operating income of $21m and a net income of $9m in Q1 FY24. Its diluted earnings per share (EPS) was $0.02.

Under Armour president and CEO Stephanie Linnartz said: "Our international and direct-to-consumer businesses, both of which realised solid growth in the quarter, continue to deliver aside a challenging consumer retail environment in North America. Based on this performance, we are maintaining our outlook for fiscal 2024.

"As we continue executing against our Protect This House three strategic priorities, including our prioritisation of North America, we have taken several important steps.

“These steps include leadership changes, amplifying storytelling to drive global brand heat and optimising our product engine to deliver elevated design and ground-breaking innovations that athletes covet. I am confident that we will achieve the improved growth and profitability this brand is capable of over the long run."

For the full FY24, the company expects revenue to be between flat and slightly up, with a gross margin set to grow by 25 to 75bps. It also expects operating income in the region of $310m to $330m.

APAC duty-free market expected to grow fastest, fueled by rising income levels and international travelers

Per latest GlobalData estimates, the global duty-free market retailing market was valued at $49 billion in 2022, its highest level ever as it bounced back from the pandemic impact, and is expected to grow at a CAGR of more than 28% during the period 2020-2026, driven by government initiatives, rising passenger numbers, major global events (for instance global sporting tournaments) and the renewed popularity of cruise trips. Infrastructure investments will also play an important role, particularly airport expansion and space refurbishment, and investments in arrivals duty-free formats. That said, growth will be held in check in the years ahead by the permanent erosion of disposable income from the heightened cost of living impacting demand for air travel. The duty-free market in the APAC region showed strong growth in 2022, as traveler numbers surged in response to the lifting of travel restrictions. To cater for rising demand in the region, many airports in the APAC area are expanding and modernizing, giving duty-free stores greater space that will allow them to attract more customers. The future of APAC duty-free retail is also being shaped by the adoption of technology. The rise in online shopping, mobile payments, and digital marketing are giving businesses new ways to connect with customers and improve the shopping experience.