For the first time in 11 years as a publicly traded company, Under Armour today posted its first official quarterly loss in operating income. And yet, fallout has been minimal, as the company met its own expectations and exceeded those of some analysts on Wall Street.
For the first three months of 2017, Under Armour reported a net loss just shy of $2.3 million, at a cost of about one cent per share, according to its announcement. Analysts had predicted it would fall as much as four cents per share, according to CNBC.
Overall revenue increased 7 percent, far short of normally staggering average quarterly growth of 23 percent from 2012 through 2016. In actual dollars, that came out to $1.1 billion in new revenue.
The company attributed the drop to a sluggish North American retail market, saying in its announcement that “new distribution was more than offset by the absence of business lost to bankruptcies in 2016” – a reference to accumulating bankruptcies of brick-and-mortar sporting goods retailers like The Sports Authority.
Under Armour performed well abroad, hitting 57 percent revenue growth in “currency neutral” terms, or 52 percent growth if accounting for foreign exchange rates.
Growth in footwear sales was notably lacking, rising just 2 percent compared to a 64 percent jump in the first quarter of 2016.
CEO Kevin Plank just seemed happy that there were no surprises.
“Our first quarter results were in line with our expectations and we’re off to a solid start in 2017,” he said in the earnings announcement. “By proactively managing our growth to deliver superior innovative product, continuing to strengthen our connection with consumers and increasing our focus on operational excellence – we have great confidence in our ability to drive toward our full year targets.”
The South Baltmore-based company’s target for all of 2017 is 11 to 12 percent growth. It set that mark earlier this year after it missed its earnings target for the final quarter of 2016, which led to the departure of its then-chief financial officer, spooked investors and sent share prices plummeting.
Shortly afterward, the company took a publicity hit after Plank went on CNBC and voiced support for President Donald Trump, who had recently signed an executive order trying to block visitors and refugees from seven predominantly Muslim countries from coming to the United States (the order itself was blocked by a federal court).
Confronting a resulting consumer boycott and flack from some of the brand’s star athletes, Plank eventually issued an apology in an open letter, taking a firm stance against Trump’s travel ban pipe dreams and promising that his company values diversity.
Today on Wall Street, Under Armour share prices appeared unfazed by any potential fallout from the earnings announcement. Share prices were up 8 percent after the first hour of trading on Thursday, a sign that investors were more relieved about company meeting its revenue target than about seeing its first loss.