Under Armour, Under Its Targets (UA)

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Under Armour (NYSE: UA) has reported earnings that look like more disappointment is on the way.  The sports apparel company posted $0.06 EPS on revenues of $157.3 million, although First Call had estimates at $0.03 EPS on $153.6 million in revenues.

While this is above plan on the EPS side of the equation, this is actually a 71% drop in net income.  Gross margin was 47.6%, down from 48.7% in the prior year.

The company is also backing 2008 revenue goals of $765 to $775 million, although estimates from First Call are $775.2 million.  Unfortunately, Under Armour is backing away from the 40 to 50 basis points improvement in margins and now sees a drop of 30 basis points in margins to about 50%.  Therefore net income expectations are now $103.5 to $104.5 million, down from prior targets of $108.5 to $110.5 million.

Shares are indicated down over 8% at $35.25 in thin volume pre-market trading; and the 52-week trading range is $25.39 to $73.40 (although lowest close was $28.01 and second lowest close was $31.29).

Jon C. Ogg
April 29, 2008