Under Armour Falls Short on 2017 Growth Prediction, But Beats Analysts’ Expectations

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Under Armour’s headquarters, photo via Wikimedia Commons

Under Armour missed its original growth mark for 2017, but its share price is rising today after the company surpassed analysts’ expectations for fourth-quarter sales.

Under Armour’s revenue rose 5 percent in the final three months of 2017 compared to one year earlier, totaling $1.37 billion. That bested analysts’ predictions of $1.31 billion in sales, according to CNBC, which has made investors happy and sent stock prices soaring by more than 19 percent today, as of 10 a.m.

The firm’s revenue for all of 2017 grew by 3 percent, which marks a considerable shortfall from its projection of 11 to 12 percent that it announced around this time last year. (Remember, that projection was far lower than the company’s previous annual average growth rate of 23 percent per year for the previous five years, which sent credit ratings and share prices plummeting.)

CEO Kevin Plank said in a statement today that “2017 was a catalyst for us to begin strategically transforming Under Armour into an operationally excellent company.”

“A year into this journey, our fourth quarter and full year results demonstrate that the tough decisions we’re making are generating the stability necessary to create a more consistent and predictable path to deliver long-term value to our shareholders.”

Some of those tough decisions for the athletic wear maker included a restructuring of its C-suite, removing Plank from the role of president and shifting its strategy to investing more in product development and counting less on an unfavorable North American retail market to prop up sales.

For 2018, Under Armour plans to continue restructuring, an effort initiated in August of last year that involved closing facilities, killing leases and laying off employees. This year’s restructuring will cost between $110 and $130 million, the company said, though it predicts that will pay off in the long run with at least $75 million in annual savings starting in 2019.

Plank’s firm is staying humble with its growth projections this time around, forecasting “low single-digit” growth for 2018.

Ethan McLeod
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