Shares of branded athletic performance apparel and products provider Under Armour (NYSE:UAA) are on the rise today after the company announced better-than-expected numbers for the second quarter. At $1.6 billion, revenue remained flat as compared to the prior year but exceeded estimates by $30 million. EPS of $0.24 outpaced expectations by $0.04.
During the quarter, Wholesale revenue declined by 1% to $940 million, but direct-to-consumer revenue increased by 3% to $596 million thanks to e-commerce sales. While sales in North America dropped by 2%, the company witnessed gains across the Asia-Pacific and EMEA regions. Further, a decline in Footwear revenue was offset by higher sales in the Apparel and Accessories verticals.
Adding to this, Under Armour’s gross margin expanded by 260 basis points to 48%, primarily due to lower freight expenses. For Fiscal Year 2024, the company expects revenue to be down 2% to 4% owing to challenges in the North America region.
Still, Under Armour has reaffirmed its expectations for operating income to be in the range of $310 million to $330 million. EPS for the year is seen landing between $0.47 and $0.51.
Is UAA a Good Stock to Buy?
Overall, the Street has a Hold consensus rating on Under Armour. Following a nearly 10% rise in Under Armour shares over the past month, the average UAA price target of $9.50 implies a substantial 31.8% potential upside.
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