Two Quarter Earnings Rose 7.7%, But Andemar's Recovery Still Has A Long Way To Go.

Total revenue grew 7.7% to $1 billion 175 million over the same period.

Total revenue grew 7.7% to $1 billion 175 million over the same period.

Revenue increased by only 1.6%, but

Revenue grew by 28.4%, especially in Europe and Asia.

Gross profit margin decreased by 0.9 percentage points to 44.8% year-on-year.

Inventories increased by 11% to $1 billion 300 million.

Andmar finally got good news in the pformation and reorganization.

Before us Eastern time last Thursday,

The two quarter earnings report was released.

About 8% of the revenue growth is higher than Wall Street expected, especially the international market growth of nearly 28%, indicating that overseas investment is paying dividends.

Thanks to the good news, Andrew shares rose 9.5% in the pre market trading, which closed at $20.55 on the day, up 4.1%. The current market value is more than 8 billion 500 million dollars, which is nearly 1/3 higher than the annual report released in March.

Since this year, the price of Andrew has risen by about 50%, but it is still far from the historical second high of about $115 in September 2015.

But JimDuffy, an analyst at investment banking firm Defoe, said in a report last Thursday that "this quarter shows that Andemar has laid the foundation for promoting sustainable earnings growth in 2019."

This report prompted PaulBeland, an analyst at the US financial research and Analysis Center, to raise its stock rating from "strong sell" to "sell".

"We are working hard to pform and operate a better company and enlarge the strength of the brand," said Andrew CEO Kevin Planck KevinPlank in a statement.

At the end of 2016, Andemar was in a predicament, too fast to expand, the brand positioning was not clear, and the products could not adapt to the movement and leisure trend was all the reason for the recession. Thereafter, Andemar tried to pform around the subdivision of sports category and reduce inventory.

However, judging from the performance of the two quarter, the pformation has achieved initial success in many respects.

The first is the rebound in the local market, the North American market, which has grown for the first time in the past year, which accounts for 3/4 of the revenue of the company.

According to NPD, Andemar's market share in the United States increased from 6% in April 2016 to 7% in April 2018.

But the growth rate of 2% is still minimal.

"When we look at the business in North America, we are very satisfied with where we are, and are confident when we look forward to the future.

"President Andemar and COOPatrikFrisk said he got the appointment a year ago and supervised.

Restructuring.

CristinaFernandez, analyst at Tel Consulting Group, said in a report to investors that Andrew is facing increased competition from Nike, Adidas and countless other sportswear brands in the US.

Compared with most of its competitors, Andrea relies heavily on North American sales.

Nike gained 44% of the revenue in the region, while Adidas was around 21%.

This makes it more vulnerable to the local market.

Over the past year, many sporting goods and footwear retailers in the United States have gone bankrupt. But thanks to the international market providing more than 60% of revenue, Nike has gone through the domestic storm better than its competitors.

But Andemar also survived the difficult situation. In the first quarter, the wholesale business of sporting goods stores increased by 9% to 710 million dollars, higher than the 7% growth rate of direct sales to customers.

Compared with the low growth rate in North America, the international market has been enjoying a high growth season, and has gained 28.4% of its revenue growth. Sales of EMEA (Europe, Middle East and Africa) have increased by 20.8%, and the Asia Pacific region has increased by 34.3%.

However, Adidas's sales in Greater China in the first quarter also increased by 26%, while the German brand's revenue base was more than 30 times that of Andemar.

But the problem of profitability has not yet been resolved.

Andemar has not been able to make profits for 3 consecutive quarters.

Last quarter, its losses amounted to US $95 million 540 thousand.

In the first half of this year, Andrew accumulated a net loss of $126 million.

In the same period last year, the figure was $12 million 300 thousand, or 3 cents per share, while the 95 million 540 thousand US share meant a loss of 21 cents per share.

According to Thomson Reuters analysis, the loss of a one-time project is 8 cents.

Among them, North America lost 93 million, an increase of 1620% over the same period, and Europe also suffered a sustained loss of $about 10000000. Only Asia Pacific realized a profit of about 18000000 dollars.

Even after excluding the impact of the restructuring plan, the adjusted total net loss was $34 million.

On the product side, Andemar's clothing revenue increased by 10% to 747 million dollars during the reporting period, which was boosted by training and running categories.

Footwear revenue grew faster, reaching 15%, or $271 million, and running and team sports greatly increased this performance.

Planck said, Hovr running shoes, Curry5

They are all salable products.

Among them, Hovr is a series of running shoes introduced by Andemar in February, using a special damping system, in just a few months.

It has produced a good response among retailers.

(HovrSonic) (left) and HovrPhantom running shoes.

Andemar started about two years ago, turning from the previous clothing, footwear and accessories organization system to motion category structure.

During the pition period, the brand decided to change the way and place of sale of its best sports shoes.

"Our intention is not to over distribute products, and to consider the allocation of each region and channel to accelerate the demand and sales of each channel," said Andemar, senior vice president and general manager of TopherGaylord.

Andrew reduced the time needed to design new products and put them into stores to help them better respond to the needs of consumers, while streamlining the number and type of products in different categories.

To this end, Andrew canceled some sponsorship contracts for teams or athletes, which reduced millions of dollars in endorsement and licensing agreements.

In addition, Andemar has shut down several poorly performing brand stores and outlets in the United States.

Excessive decentralization at the end of the product and the rapid pace of global expansion have led to a surge in inventories.

In the two quarter, Andemar's inventory level increased by 11% to $1 billion 300 million.

This will make the brand forced to discount more products in enterprises like Kohl s and J.C.Penney.

"This is the short-term pain of long-term earnings," PatrikFrisk said at a conference call with analysts.

Andemar said CFODavidBergman has been using low-cost retailers as a way to clean up its inventory.

Although the inventory level is "higher than we want," the company is striving to "actively manage it".

This led to the two quarter gross profit margin of Andrew declined to 0.9 percentage points to 44.8%.

Bergman also said that the excess inventory was sold in low price channels (such as TJMaxx), but this obviously fell into a vicious circle.

Dick, a sporting goods company, CEOEdStack attacked a decision at the earlier this year's earnings call conference to expand its distribution to Cole's (Kohl 's) store.

Stack says Dick's anderma product sales have been weakened by its expansion of distribution, creating a "highly promotional environment" that affects retailers' profits.

"Wider distribution will definitely have an impact, and I think it will continue to have an impact until the channel segments are completed," Stack said.

For Andrew, this behavior will lead to even more serious and deep-seated problems.

"Many of the customers are moving to other brands," said NeilSaunders, managing director of GlobalData, a retail consultancy. The sporting goods company is facing a widespread identity crisis that could disrupt its nascent pformation.

He said that the company decided to expand its distribution to discount stores like Kohl 's, before being more full retailer such as Dick'sSportingGoods, which changed Andemar's credibility.

"More and more consumers are baffled by Andemar's proposition," he said. "There is no attention to any particular sport and product development is too fragmented.

"In our view, brand needs to have a clearer identity, and it may get wider acceptance and increase the number of customers through the use of sub brands.

But Andemar CFODavidBergman said Andrew plans to reduce sales promotions in the third and fourth quarters of this year.

Excessive sales will greatly affect consumers' purchase of full price products.

At the same time, Andemar is also trying to promote the sale of full price products, including products that are working with Dwayne Johnson and Hovr running shoes.

"The price we have been promoting is mainly [2017] products," Bergman said. He pointed out that this year's products are sold through the traditional wholesale and direct channels of the brand.

But Andemar's challenge is more than that.

The cost of restructuring will be further expanded, reaching $79 million in the two quarter.

In February 13th, Andrew announced the 2018 restructuring plan, which is expected to generate about $110 million to $130 million in pre tax restructuring and related costs.

After further examination, Andemar has identified an additional restructuring plan of about $80 million, which is expected to generate about $190 million to $210 million in pre tax restructuring and related costs in 2018.

Sales and administrative expenses also increased by 10% to $553 million.

Over the past month, Andrew has greatly balanced the leadership and management structure, including replacing the managing director of Greater China, Latin American general manager, managing director of EMEA, and expanding its Hongkong office to Asia Pacific headquarters.

"When we strive to expand our international business, we will continue to focus on and measure the development of our entire portfolio to ensure that we bring long-term returns to shareholders," said Andemar, President and chief operating officer of PatrikFrisk. "We are on the way to becoming a more efficient company."

Looking ahead, Andrew expects net revenue growth in the fiscal year 2018 to be about 3% to 4%, while North American sales fell to the low median figure, and international sales grew by more than 25%, while sales in the 2019 fiscal year increased by 6.8%, because its goal is in North America.

Rebuild it.

Nike expects growth of 8.1% and 7.3% in the two years.

The adjusted gross profit margin is expected to slightly improve compared with 2017, increasing by about 50 basis points to 45.5%.

But operating losses will remain between $50 million and $60 million.

Excluding the impact of the restructuring plan, the adjusted operating income is estimated to be between 130 million and 160 million dollars.

"We will never declare victory," Planck said at a conference call with analysts last Thursday. "We are in the toughest stage of pformation, but this is a long-term process."