UA In The Second Quarter Was Up 28% Over The Same Period Of Last Year

Recently, Under Armour announced the second quarter of June 30th as of 2016.

In the quarter,

Revenue continued to grow, but profits plummeted.

With the inventory crisis in the US market and the bankruptcy of important channel operators, the sporting goods industry in the United States has experienced a very difficult quarter.

For UA, this is a mixed quarter.

From the point of view of revenue, UA performed well in the quarter, up 28% from $784 million a year ago, reaching 1 billion US dollars, unchanged from analysts' expectations.

But according to Bloomberg data, this is the first time that UA's revenue growth has failed to exceed analysts' expectations since 2008.

For the region, North America's revenue grew by 21.5% over the same period last year, while the growth in North America increased by 68.3% over the same period last year.

From the perspective of business attributes, wholesale business revenue rose 27%, to $635 million, and grew by 28% to 321 million in the face of consumer direct selling business.

The biggest bright spot comes from

。

In the quarter, UA footwear revenue rose 58%, to $243 million.

This is mainly due to the sale of Stephen Currie's signature basketball shoes.

UA founder and CEO Kevin Planck said, "Stephen Currie's signature shoes continue to drive the growth of brand revenue."

The three generation of curi will be released this autumn.

In addition, backpackers and headwear led accessories category revenue increased 21%, to $101 million.

Men's training, women's training and golf driving

Category revenue grew 19%, to $613 million.

However, on the other side of the overall rise in revenue, the twentieth year UA is facing a profit dilemma.

Gross profit, operating profit and net profit declined in varying degrees in the quarter.

Among them, operating profit fell 39% compared to the same period last year, only 19 million US dollars.

Net profit fell by 58% compared to the same period last year, only 6 million US dollars.

In the earnings report, this is related to the bankruptcy liquidation of sporting goods retailer Sports Authority.

Meanwhile, UA's total sales, administrative and general expenses in the quarter increased by 32% over the same period.

This is also inseparable from the Sports Authority event, but it is also related to UA's continuous investment in direct selling and the expansion of staff size.

At the end of June 2016, UA held cash and cash equivalents of $121 million, down from 149 million in the same period a year ago.

Worryingly, its inventory grew by 30% over the same period last year, to $1 billion 100 million.

In addition, total debt rose by 42% to $1 billion.

The Sports Authority event has a great impact.

In the US market, the channel is bankrupt and inventory is backlog. The cost to UA is a sharp increase in cost and a sharp drop in profits.

UA is not a case.

A recent UBS report said that 4-6 months in 2016 was one of the most difficult quarterly sports industry in the United States.

In 2015, the large amount of stock accumulated during the holiday season (from Thanksgiving to Christmas and new year) and the bankruptcy liquidation of Sports Authority in March seriously affected the market performance of sporting goods brands.

The US market is still the main source of revenue for Nike and UA.

Sports Authority is the fourth largest sporting goods retailer in the United States. It has more than 460 stores in the United States, and its closure has had a great impact on many sports brands.

Morgan Stanley and Cowen &Co.'s report pointed out that analysts are worried about whether Nike can guarantee sustained growth in the North American market amid the backlog of inventory and the poor supply chain.

To this end, at least four brokerages lowered the rating of Nike stock.

The latest corporate earnings report at the end of June shows that Nike has a large stock.

In a recent conference call, Trevor Edwards, President of Nike brand, also said that Nike would handle large quantities of inventory through factory shops and third party sales channels.

UBS believes that Nike may have to spend more time than expected to digest clothing inventory.

Not only UA and Nike, Lulu lemon (Lululemon) are also trapped here.

According to the commercial insider, in the first quarter of May 1st, Lulu lemon inventory increased by 21%, and sales fell by 17%.

But in UBS's view, UA also has its own shortcomings, such as slow reaction to market trends.

Women's and young people's clothing, originally UA's two key categories, is now slow to sell.

Morgan Stanley's March report pointed out that in the first quarter, the sales of UA women's clothing decreased by 7% compared to the same period last year, down by 6%.

Of course, UA is also adjusting strategies to deal with it.

To open up the fashion market, UA will launch a new high-end product line named UAS (Under Armour Sportswear) in the autumn, and excavate Tim Coppens, the fashion designer who worked in Ralph Lauren and Adidas, as the chief creative officer of the product line.

UAS's jogging pants may cost $395 at that time.

Tim Coppens UA dug up and wanted to play a big role in the fashion industry.

The company has high hopes for UAS.

Ben Preuss, senior vice president of UA, said, "this gives us an opportunity to reach new consumer groups."

Planck said, "UAS will bring young, fashionable and innovative voice to sportswear.

This is a good opportunity. "

UA is also making a big push into the western United States to attack Nike's hinterland.

In May this year, UA signed a long contract with UCLA for a total price of $280 million for 15 years, facing Nike in the campus sports footwear market.

In addition, to expand sales channels, starting next year, 1100 stores under Kohl's s will sell UA products, which is expected to contribute 10% of the latter's North American sales.

In Losangeles, there are 100 offline stores in the Department of Sports, which will fill the 60 stores that UA has lost due to the bankruptcy of Authority.

UA is also strengthening its defense in the East.

Planck said that in 2019, they will take over the position left behind after the closure of FAO Schwarz, a large toy flagship store in New York.

For this 53000 square foot flagship space in Fifth Avenue, New York, Planck is planning to open the world's largest retail store.