Yahoo Finance’s Julie Hyman and Brian Sozzi break down Under Armour’s latest quarter.
JULIE HYMAN: I'm going to move on to a very different kind of retail now, a retail manufacturer. We could say as well retail/manufacturer. Under Armour is what we're talking about, that company out with its numbers this morning, Brian Sozzi. That, too, doing better than estimated. I mean, I feel like everybody's doing better than estimated nearly, right?
But the company says now if it's looking at the year that revenue is going to rise by high teens percentage, that's better than they had been predicting revenue this last quarter. The revenue that you're looking at there was up by 35%. So it seems like Under Armour's gaining a little bit of traction here.
BRIAN SOZZI: Meh. Meh. That's all I have for you on this quarter. I think this was a highly telegraphed quarter for Under Armour because we have seen strong results in recent weeks from a Levi's. We had a blowout quarter from Crocs last week. So the apparel players have been doing very well, as people rebuild their closets.
What I would be concerned, if you are an Under Armour investor, for the past year, they've been very focused on getting their house in order, a lot of operational mistakes there over the past two years. And they've been cutting hundreds in million dollars-- hundreds in millions of dollars in costs over the past year and a half. Their inventory down $110 million year over year.
I would be concerned if Under Armour has the-- enough-- has enough inventory in its retail stores, in its wholesale accounts like a Macy's-- you name it-- to service the boom in demand we are seeing in these stores right now as consumers go out there and shop and rebuild their closet. Just judging by their balance sheet, it doesn't look like they have enough inventory out there.
JULIE HYMAN: Interesting. So we'll have to see. They're actually having their conference call right now. So we'll have to see if we get any color around that question. Something else in terms of getting the house in order that I think we need to mention is the settlement that they're paying to the Securities and Exchange Commission. And this has been a years long overhang of Under Armour, you could say. Not necessarily from an investment perspective, but it's just something that the company's been dealing with for a long time.
And this basically has to do with the way that it was accounting for its sales. It was pulling forward orders from future quarters into the current quarters. So they're paying $9 million to settle these regulatory claims. This happened back in, I believe, 2015 here. And it sounds like the company and its executives-- neither the company nor its executives is admitting or denying wrongdoing as a part of all of this. But still, this brings to a close something that had been going on for a long time, Brian Sozzi, that I know that you have been tracking as well.
BRIAN SOZZI: Yeah, it ultimately could help remove another overhang to the stock. But again, this is good that they can get this in the rearview mirror. It's, in many respects, a ghost of former Under Armour founder Kevin Plank. That's now out of the way. That's good. They could focus on rebuilding their business. But again, I would be concerned if they have enough things to sell human beings who are going to be on the move after the vaccine this summer.
JULIE HYMAN: Well, judging by those shares, it looks like you're not the only one who's meh on the [? corridor. ?]