Under Armour (UA) Guidance Cut on Sports Authority Disappearing - FBR
FBR Capital analyst, Susan Anderson, noted that after the market closed, Under Armour, Inc. (NYSE: UA) announced that it is revising its previously issued outlook for 2Q16/2016 due to bankruptcy proceedings of The Sports Authority (TSA). It was not expected that TSA would close all of its stores since a buyer was anticipated as likely to emerge.
UA noted that TSA was expected to generate $163M in revenue in 2016, ~3% of UA's total sales. UA will now only be able to recognize $43M of revenue from TSA, or 1% of TSA sales. As a result, UA lowered its 2016 revenue guidance to $4.925B, from $5.0B, and its EBIT guidance to $440M to $445M, from $503M to $507M.
UA reiterated it still expects to achieve high-20% revenue growth for 2Q16.
The analyst views this as a one-time external event and still expects UA to generate high-20%/low-30% revenue growth over the next several years.
No change to Outperform rating or $59 PT.
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Shares of Under Armour, Inc. closed at $37.73 yesterday.