Under Armour (UAA) reports Q4 2021 earnings beat

Under Armour shares fell on Friday despite the retailer reporting fourth-quarter earnings and sales ahead of analysts’ estimates, as supply chain constraints are clouding its outlook.

The company also warned that heightened freight expenses will weigh on profits in the coming months. Under Armour has said previously that it’s been paying for more expensive air cargo to move goods from overseas, but even shipping is more costly right now.

Chief Financial Officer David Bergman called the pressures a “temporary speed bump.” In the near term, Under Armour will remain cautious and agile until the shipping congestion and backlogs subside, he told analysts on a post-earnings conference call.

Chief Executive Patrik Frisk said its plan to build a healthier brand is working, even in spite of the headwinds. The company’s goal is for consumers to view Under Armour as a more premium label, alongside brands such as Nike and Lululemon, as it focuses on key wholesale partners like Dick’s Sporting Goods and Kohl’s.

The stock was recently down 10% in trading Friday.

Here’s how the company did in the three-month period ended Dec. 31 compared with what analysts were anticipating, based on Refinitiv estimates:

• Earnings per share: 14 cents adjusted vs. 7 cents expected
• Revenue: $1.53 billion vs. $1.47 billion expected

Under Armour reported net income of $109.7 million, or 23 cents a share, compared with $184.5 million, or 40 cents a share, a year earlier. Excluding one-time items, it earned 14 cents a share, beating analysts’ estimates for 7 cents.

Revenue grew to $1.53 billion from $1.4 billion a year earlier. That topped analysts’ expectations for $1.47 billion.

Net revenue in North America rose 15%, while international sales were up 3%. E-commerce sales rose 4% from year-ago levels, representing 42% of Under Armour’s direct-to-consumer sales, with the remainder coming from the retailer’s brick-and-mortar stores.

Within total revenue, apparel was up 18%, footwear grew 17%, but accessories sales tumbled 27%.

A year earlier, Under Armour saw accessories sales spike as consumers purchased baseball gloves, water bottles and sunglasses for outdoor activities during the Covid pandemic. The brand also saw a surge in its face mask sales.

Last year, Under Armour announced it was changing its fiscal year end date from Dec. 31 to March 31. Following a three-month transition period from Jan. 1, 2022 to March 31, Under Armour’s next fiscal year will run from April 1 to March 31, 2023.

The retailer on Friday gave an outlook for the transition quarter. Sales are expected to be up a mid-single-digit rate, compared with a prior outlook of a low-single-digit increase. Supply chain constraints are limiting the amount of spring and summer products it is offering, and that will put some pressure on its sales.

Earnings for that period are forecast to be in a range of 2 cents to 3 cents a…