Under Armour, Inc. (UA) Discounting Makes Profit Upside Difficult to Achieve - Needham

Needham & Company analyst Rick Patel reiterated a Hold rating on Under Armour, Inc. (NYSE: UA) after tracking and analyzing ~4,500 products on underarmour.com.

The analyst stated "For 3Q19, the % of SKUs on discount was up y/y, which we expected due to UAA relying heavily on the off-price channel LY. However, promos were also up q/q for men’s apparel (UAA’s largest category), which is surprising given inventories were lean and (26%) y/y into 3Q". Analyzing these points he stated "We view UAA set a low bar by guiding N. America sales (MSD%) in 3Q, which we see as achievable. But given the increase in discounting q/q, we now model 3Q GM +120bp (vs +135bp prior) and EPS of $0.18 (vs $0.19 prior). We maintain our Hold; we view 4Q19 guidance for a sales acceleration is likely to be difficult without relying on discounting".

For an analyst ratings summary and ratings history on Under Armour, Inc. click here. For more ratings news on Under Armour, Inc. click here.

Shares of Under Armour, Inc. closed at $17.75 yesterday.

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