Under Armour (NYSE: UA) (NYSE: UAA) reported Q3 EPS of $0.25, $0.12 better than the analyst estimate of $0.13. Revenue for the quarter came in at $1.44 billion versus the consensus estimate of $1.41 billion.

• Revenue was up 2 percent to $1.4 billion (up 3 percent currency neutral).
  • Wholesale revenue increased 4 percent to $914 million and direct-to-consumer revenue was flat at $465 million, representing 32 percent of total revenue.
  • North America revenue decreased 2 percent to $1.1 billion (down 1 percent currency neutral) and the international business increased 15 percent to $351 million (up 17 percent currency neutral), representing 24 percent of total revenue. Within the international business, revenue was up 15 percent in EMEA (up 16 percent currency neutral), up 15 percent in Asia-Pacific (up 16 percent currency neutral) and up 16 percent in Latin America (up 23 percent currency neutral).
  • Apparel revenue increased 4 percent to $978 million with growth in training, golf and team sports. Footwear revenue was flat at $285 million. Accessories revenue decreased 6 percent to $116 million driven by declines in outdoor and training.
• Gross margin increased 10 basis points to 46.1 percent compared to the prior year including a $5 million impact related to restructuring efforts. Excluding restructuring efforts in both periods, adjusted gross margin increased 20 basis points to 46.5 percent compared to the prior year driven predominantly by product cost improvements and lower promotional activity offset by channel mix.
• Selling, general & administrative expenses increased 5 percent to $528 million, or 36.6 percent of revenue driven by continued investments in the direct-to-consumer, footwear and international businesses.
• Restructuring and impairment charges were $19 million.
• Operating income was $119 million. Adjusted operating income was $143 million.
• Net income was $75 million or $0.17 per diluted share. Adjusted net income was $112 million or $0.25 per diluted share.
• Inventory decreased 1 percent to $1.2 billion.
• Cash and cash equivalents decreased 35 percent to $169 million.

"Our third quarter results demonstrate that our multi-year transformation is on track," said Under Armour Chairman and CEO Kevin Plank. "As we work through this chapter, we are staying sharply focused on our brand by connecting even more deeply with our consumers while delivering industry-leading, innovative products and premium experiences. Coupled with increasingly greater business discipline and resulting efficiencies, we continue to gain confidence in our long-term path and ability to deliver for our consumers, customers and shareholders."

GUIDANCE:

Under Armour sees FY2018 EPS of $0.19-$0.22, versus the consensus of $0.20.

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