The company’s stock is up nearly 30% this year.
Things are finally looking up for Under Armour. After a rough couple of years, the company’s stock is up nearly 30% this year. And on Thursday, the company’s shares gained another 4% on the heels of a positive first-quarter earnings report.
The earnings report exceeded investor expectations across nearly every category. The company recorded earnings of 5 cents per shares and raised its forecast for the rest of 2019.
Under Armour’s revenue reached $1.21 billion, beating out investor expectations of $1.18 billion. International growth is up by 12% and the company was able to make some headway in minimizing over $1 billion of inventory.
A rocky road for Under Armour
Though Under Armour is a well-recognized athletic apparel brand, it has struggled over the past three years. In 2017, the company was $765 million in debt and incurred $34 million of interest expenses. And the company dealt with public embarrassment after the Wall Street Journal reported that company executives visited strip clubs.
Under Armour’s excessive spending habits have also concerned investors for a long time. The company paid millions of dollars to have sports stars like Michael Phelps wear and verbally support its clothing line. Under Armour even created a line of sneakers for Steph Curry and paid money to various sponsor sports team and the stadiums they planned in.
It was never clear exactly what Under Armour gained from these pricey sponsorships. The company’s revenue certainly didn’t match its spending habits and its stock fell substantially.
Fortunately, Under Armour has toned down these large endorsement deals in the years since. Since 2017, the company’s stock has risen by almost 100%. And the company has steadily been paying off its debt over the years. So far, Under Armour has paid down $704 million in debt.
Analysts seem to be positive about the direction Under Armour is headed in. There is strong consumer demand for athletic leisure wear in general. And though Under Armour does fall short of Nike and Adidas, it has a strong brand recognition.
If Under Armour can continue to increase its revenue, eliminate its outstanding debt, and keep inventory low, it should be well-positioned in 2019.