UNDER ARMOUR TRIPLE CLOWN RAPED: MISSED EARNINGS, LOWERED GUIDANCE, CFO QUIT

This is a company in crisis, makers of horribly looking sneakers and apparel. I never quite understood how anyone could buy their sneakers. Then again, I’m a guy who never wears sneakers and believes wearing shorts is for women and small children.

Nevertheless, $UAA is plunging in dramatic fashion this morning after missing and issuing downside earnings guidance. Plus, the CFO is Mcquitting — never a good sign.

What stands out the most is the drop in gross margins and 17% spike in inventories. This company must be Kmarting their merchandise in an effort to attempt to reach goals. I know the CEO, Kevin Plank, is one of those high school QB assholes who pretend to know everything and walk around life like it was a giant fucking locker room, slapping people on the ass and snapping wet towels at their faces.

Well guess what asshole? Your fucking company is a piece of shit now and no one cares about your motivational speeches.

Now your shares are in the gutter and your company is taking on water, a la SS Titanic.

Reports Q4 (Dec) earnings of $0.23 per share, $0.02 worse than the Capital IQ Consensus of $0.25; revenues rose 11.7% year/year to $1.31 bln vs the $1.41 bln Capital IQ Consensus.
North American revenues grew 6 percent.

International revenues, which represented 16 percent of total revenues in the quarter, were up 55 percent driven by significant growth in the U.K., Germany, China and Australia.
Apparel revenues increased 7 percent to $929 million including strength in golf and basketball.

Footwear revenues increased 36 percent to $228 million driven by accelerated growth in running and basketball.
Accessories revenues increased 7 percent to $104 million with strength in bags and headwear.

Gross margin was 44.8 percent compared with 48 percent in the prior year’s period, as benefits from more favorable product costs were offset by aggressive efforts to manage inventory, changes in foreign currency and the outperformance of footwear and international businesses in the overall mix.

Inventory increased 17 percent to $917 million.

Total debt increased 22 percent to $817 million.

Co issues downside guidance for FY17, sees FY17 revs of +11-12% approx $5.4 bln vs. $6.06 bln Capital IQ Consensus Estimate.
Gross margin is expected to be slightly down y/y.

Tempered top line results coupled with strategic investments in the company’s fastest growing businesses are expected to cause a decline in operating income to approximately $320 million.

Other full year assumptions include interest expense of approximately $40 million and an effective tax rate of 32 to 34 percent.

CFO Departure
The Company’s Chief Financial Officer, Chip Molloy, has decided to leave the company due to personal reasons. Effective February 3, David Bergman, Senior Vice President, Corporate Finance will serve as acting CFO. Mr. Molloy will remain with the company in an advisory capacity to assist with the transition.

Retail is dead. This company needs to be reinvented.