What Happened:
Shares of athletic apparel company Under Armour (NYSE:UAA) fell 8.7% in the morning session after the company announced an update to its FY 2025 restructuring plan, which led to projected higher losses, with EPS guidance falling below Wall Street estimates. The company now anticipates pre-tax restructuring charges of $140-$160 million, driven primarily by its decision to exit a California distribution facility by March 2026.
Precisely, Under Armour adjusted its FY'25 outlook, now expecting a higher operating loss of $220-$240 million (vs. the previous est. of $194 to $214 million) and a diluted loss per share of $0.58 to $0.61 (vs. the previous est. of $0.53 to $0.56.).
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What is the market telling us:
Under Armour’s shares are quite volatile and over the last year have had 15 moves greater than 5%. In context of that, today’s move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was about a month ago, when the stock gained 19.6% on the news that the company reported second-quarter earnings results. Under Armour blew past analysts' constant currency revenue expectations. Its EPS also outperformed Wall Street's estimates. Moving on, full year EPS guidance was above expectations, which was icing on the cake. Zooming out, we think this was certainly a solid quarter.
Under Armour is down 22.1% since the beginning of the year, and at $6.77 per share it is trading 28% below its 52-week high of $9.40 from December 2023. Investors who bought $1,000 worth of Under Armour’s shares 5 years ago would now be looking at an investment worth $326.21.
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