Under Armor Raises Forecasts Amid Supply Chain Issues; Shares up 16%

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Customers exit an Under Armor store in New York City, United States on November 4, 2019. REUTERS / Brendan McDermid / File Photo / File Photo

Nov. 2 (Reuters) – Under Armor Inc (UAA.N) on Tuesday raised its guidance for the full year, allaying investor concerns about holiday inventory shortages reported by almost all of its competitors, and the stock rose 16%.

Factories in Vietnam, which Under Armor sources about a third of its products from, have reopened after months of closings that put many clothing brands in serious trouble.

Larger rival Nike Inc (NKE.N) has slashed its sales estimates for fiscal 2022 and expects delays during the Christmas season, while Puma SE (PUMG.DE) advised people to shop earlier for Christmas. Continue reading

“Almost all of the factories Under Armor does business with, including those in Vietnam, are open,” said CFO David Bergman, noting that port congestion and container availability have improved in some Asian ports.

Under Armor had yet to cancel some Spring / Summer 2022 orders to ease pressure on factories to be ramped up to full capacity by the end of the year, it said.

It also warned of a drop in its revenue in the first half of 2022 before challenges, including congestion in US ports, ease.

However, analysts say that Under Armor, which has used more expensive air freight to move goods, is coping well with supply chain challenges.

They also believe the sportswear boom that is helping Under Armor, Nike and Adidas AG (ADSGn.DE) could last at least until next year.

In addition, Under Armor is increasingly investing in marketing, withdrawing from discounters and focusing more on its own stores in order to enhance the brand image.

“UA is still one of the few who has successfully increased its pricing power instead of simply enjoying higher prices at lower industry promotions,” said broker BMO Capital Markets.

The sportswear maker was expecting adjusted earnings per share of 74 cents in 2021, up from Refinitiv IBES estimates of 55 cents after delivering better-than-expected results in the third quarter.

Reporting by Praveen Paramasivam in Bengaluru; Editing by Shinjini Ganguli

Our standards: The Thomson Reuters Trust Principles.


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