What To Expect From Under Armour’s Q4 Earnings

Under Armour (NYSE:UA) has had a rather tough year so far, and the results in Q3 are testament to this fact. The company fell dramatically short of the expected revenue figure, while earnings missed by 3 cents. In the year, revenues have been hurt on weaker North American demand spurred on by changing consumer trends. To put this into perspective, business in the U.S. and Canada declined by close to 12% year-over-year in Q3.

• As mentioned previously, Under Armour has struggled with the North American market over the last few quarters. It has remained volatile for sports apparel retailers and manufacturers ever since Sports Authority went bankrupt last year. And this is worrying investors, since sales from the region account for more than 70% of the total revenues at the company. We can expect the top line to suffer in Q4 as well.
• Historically, in an attempt to move much of its mounting inventory, the company was forced to resort to heavy discounting and offer higher promotions than usual. Given that the holiday season tends to flood the market with such discounts from competitors, we can expect Under Armour to do the same in an effort to compete efficiently. For this reason, we expect to see margins shrink in Q4.
• Given the way things are, in the previous quarter, management decided to reduce its guidance for FY 2017 by half. The company lowered its full-year earnings per share forecast down to $0.18 to $0.20 from previous estimates of $0.37 to $0.40.

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