Under Armour (UA) 30 Oct 202020 Q3 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the Under Armour Inc.

Third Quarter Earnings Webcast and Conference Call. At this time, all participant are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. now today, hand Investor Lance Corporate would to conference Relations I Development. speaker your Allega, Instructions] like the to over and [Operator SVP of ahead. go Please

press future are and we results results. defined material time. effect related third immediate risks to uncertainty SEC potential joining we Good content on subject uncertainties under SEC October estimates are which Harbor on that its being and results on-going information meaningfully the today long-term can made XX, as Statements considering any future call view But at in on markets, website regularly press today the global of impact that practices forward. for detailed for be retail non-GAAP today’s differ are morning change of you with statements release. available earnings financial statement morning’s our morning’s and and events reference everyone note XXXX. documents impact forward-looking may impact due Under and could which duration to Under at and call. Considerations thank Accordingly, the at and to discussed in environment, global both this made moving that Safe suggestions. our On historical and of adjusted extent or Armour’s materially terms, that currency-neutral of about.underarmour.com. release, found reflect quarter includes from and The to its XXXX viruses conference included expect descriptions call, current business business It’s us filed may Armour’s in the could to current important and our today’s information, this including COVID-XX the continue on business rules

to and our quantify can which why refer excluded view with this we items believe of to Reconciliations GAAP found is us U.S. hear provides useful be all release, identify non-GAAP accordance amounts and investors. measures this in information GAAP. also in may You press about to

call Frisk; Armour will today’s Dave Joining Patrik be us Bergman. and CEO, President CFO, Under on and

the Following our prepared over with remarks, questions. And to open I’ll it Patrik. we’ll that, turn call for up

Thank Lance. third XXXX to quarter call. conference and everyone, our morning, welcome And you, good

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afforded has be that, uncertain dynamic than to of inventory much process anticipated, us in this of navigate profitability. consumer North around we the on and highly as our quarter, in course third is with focus had times, an demand. go-to-market proved management especially we demand disciplined All America. absolute And In flexibility including changes higher these improved centered

inventory part meet unexpected unfulfilled quarter of during our this product second Fortunately, to went due period to us store that that allowed carryover closures demand. meaning

XX% than sold expectation versus being markdowns. in post our to quarter the and helped discounts inventory previous third Additionally, down lower through expected factors us of flat at results These XX%. revenue

drivers that with stated top detail for Looking outlook July late That Dave our our cut in year, versus more half of expect balance the and last to purchases XX% at quarter the headwinds XX spring fourth XXXX improved other means deliveries said, in by back will the as line a few continue our in from fourth along we our about This of early the quarter. XXXX, we expectation. we has inventory call, planned product XXXX.

of of ensure beyond. show to more must which evolve, distribution next Switching begun North remains approach. As focused wholesale prudent the we elevating certain prioritizing and undifferentiated right, capable return continues proactively performers. gears into we wholesale and Under up on To to retail into XXXX working area, profitable be management and a consumer retail year, the with in brand partners is meaningfully primarily America, direct part to focus to Accordingly, clear, have XXXX, Under future reduce that in and identifying broader landscape footprint we're focused a marketplace as brand also crucial Armour so but our we. is our Armour’s starting third that

formats. which engage quarter. spot continues becoming e-commerce, our premium whenever now majority CRM more global than our consumers. a progress of scalable, And make store Armour sites and brick-and-mortar working interactions a business, providing around globally help our are with saw and personalized our brand. more e-commerce right XX% robust a our centered more the Starting we one us capable and platform, remain a to power retailer to efforts resonant best-in-class efforts growth to In drive directly continue on more towards and this Under to evolving Our the scalable functionality we we bright profitable to with wherever concepts be year, brand unlock during with of consumers our experience

us to as Across returns While last the earnings our therefore us drive and one shareholders we to an decisions essential to priority, thesis. investment invest investing to every retailer. Tying deliver are direct the long in potential brand ability a of the continuing is moment as embracing relevance connectivity. needed the to brings our holistically of elements we sustainable, our which most company, these that to It's consumer empower throughout the make operate over growth, all along focused capabilities to well journey our and strategies organization approach, obsessing better understood greater brand our consumers help class term. of together profitable must right,

term sit elevating increasingly aligned we structure the today, strategies is operating focus strongly driven with centered performer I believe brand appropriate transformation by goals. As an on that more long cost models and our our here

to tracking of most position fitness segment. I'd has connected which that another food and of before Now, decision largest of an over fitness like strong this impressive user scale part to the the MyFitnessPal morning to on went that sell innovation Dave, has sustain apps. and record popular its enabled world's it to growth and is business touch leadership MyFitnessPal one it announcement related as handing briefly out our to platform, our

will to needs, perspective, more digital past strategy to sharpens of holistically move with over power that define believe target over forward. passionate singular ability towards our we performer. the work who consumer simplifying and teammates we our owner years, harness increases this Armour a did brand Ecosystem. not it as it cohesive business and to asset its journey the UA work divestiture few this I'll strategy regard focus hand align with better core that a new home as From provides an evident MyFitnessPal as term In Dave. excellent for map going with Under by MyFitnessPal fully a perspective, sharply MyFitnessPlatform focus we that, our on long consumers the an However, brand our from to became the And our a this driving

Considering meet higher environment, say I'd economic Patrik. Thanks, well to than we demand. current we in uneven work third quarter, the all-in-all, the executed as anticipated

how look Let's at take revenue. we with did a starting

perspective, revenue quarter higher came $X.X our revenue at than expectations, was better than anticipated despite flat expected customer and the or prior From than decline, wholesale performing to to in wholesale demand North Third was year, due compared expected which sales this better billion across Lower higher a demand. our channel down driver in X%. of the than DTC due America previous primary to channels. our

we e-commerce Relative better strength our business. e-commerce in continued plan, business to expected in than direct-to-consumer trends traffic Our previous by XX% experienced increased our our driven business.

was business was by by in Our America. product our and revenue licensing categories. strength down by and in primarily sports up considerable run primarily By business team licensed our our was driven apparel train X% declines train driven in down XX% categories. driven North Footwear type, XX%

our EMEA, some QX growth revenue with wholesale by sales. business due up third this XX%, all from from in distributors X%, were our driven America driven regional as COVID-XX revenue the business, and In second the impacts would the being started in with selling North revenue price just masks, was XX% which due wholesale shifted in strong headwinds perspective, segment accessories QX up in and sports in quarter. shipments off growth growth of of down a partially reduced was on-going DTC lower new Finally, quarter COVID-XX. our These the e-commerce From by to was offset into impacts to driven by quarter year. by

America, up driven driven negative solid was continued the saw growth XX%, COVID-XX business. by impacts from our in both DTC. Latin Asia revenue we Revenue was wholesale down Additionally, and XX%, in in DTC growth Pacific In pandemic. by

had As of sold where locations this of September been about XX, reopened is in XX% brand the region.

delivered finally, prior connected However, development quarter. to And offset time a within quarter higher recognized fitness X% subscription revenue strong current partially business was period. business for due in the e-commerce growth by our DTC, down our one year's the very the fee year's in

higher points and In generally experienced gross increased as with expectations third due had than by XXX of our the and from we at certain to higher down basis restructuring off-price the from points channel basis as were through, about last was for points primarily COVID-XX basis us long-lived expected, anticipated. discounting less to were offset $XX was DTC Third total revenue. chain product percentage $XXX basis impact third significantly margin product demand, previous as supply quarter which skewed impairments and recorded of positive of sell better and data. items gross to quarter, by sales a channel allowed quarter to to XX to related as year’s XX with in to margin pricing quarter, initially the XX.X% than discounting charges negative in which related of basis points as of well lower we approximately negative mix, impact our third sell and we related million our line results Relative expense XX million. improvements footwear XX points considerably and than SG&A mix. anticipated of partially mix, benefited costing about benefits, These driven year-over-year business markdowns

of we total a realized have the incur in under charges long-lived plan restructuring this restructuring $XXX and in million range million, goodwill. $XXX impairment estimated impairments we to and related Year-to-date, expect primarily $XXX million from charges As XXXX. and $XXX million in pretax reminder, related to assets and of

of to full related expect about for year. $XX continue We million million $XX to the savings

income a no income or $XXX we per quarter Our deal per of share. million, realized well and of of equivalents and senior billion cash third third charges, and convertible finally, tax, planned as was adjusted XX% charges discount million, restructuring in quarter debt ended billion. with earnings And related grew inventory notes of borrowings net balance operating outstanding sale the on excluding the our with net adjusted $X.XX million. or at our was of From perspective, sheet $XXX earnings was income excluding share, After $XX million $X.X $X.XX the $XXX cash non-cash MyFitnessPal, the million costs amortization we diluted restructuring income under $XX $X.X our diluted revolver. quarter to as operating ending impairment adjusted

to to call, to Turning the a gave provide quarter, of on previous some the like expectations. take that percentage teen we quarter in meaningful consumer moment robust in are our year, at fourth earnings In October. revenue from to fourth addition there be I'd improvement we revenue outlook we last driven our a the balance as areas reflects rate. the the we uncertainty expect on-going low expectation the continued being color This headwinds into fourth COVID-XX, down on in to more the that With quarter said, that in few part have third general demand quarter. by trends a see around experienced

spring our compared by last in nine changes as expected is customer points quarter supply quarter. flow First, early chain our We approximately call, in XXXX anticipate versus impact on prior this to to order negatively will XXXX. timing impacts COVID-XX product result to year and late deliveries related more the timing planned change in percentage from mentioned fourth fourth

fourth quarter about licensing fourth meaningful revenues along contract on be down XX% basis. with will a due in comp year's lower significantly Additionally, minimums, contractual royalty to we expect our settlements last quarter

percent right serve off-price the will as sales lower That headwind. team focus continue also said, with a to expect be a year-over-year the excellent there. global now channel off-price to we we progress the of premium approximately as previously growth, to revenue as brand range, our manage marketplace on disclosed X% is which Finally, lower for at so a revenue year, the of end

levels relative them to expect quarter than prior to to promotional year. in continue improved While have the significantly our fourth we outlook, activity higher be last

such, we in this pressure on put gross the quarter. meaningful will believe fourth downward As margin

we while developing like business color Now, typical would we year to upcoming a our the for not see observations about practice initial to call, it on this before provide Q&A, how few our make transitioning to in XXXX. is

Of related general serve that we've the our adverse into impacts business recently, predicated from no COVID-XX premium, forward to as most other macros seen as will course, moving any said, Year. same other that path on are things a With accelerated currently we to major New there few is XXXX continuing or in we're retail revenue anticipate shutdowns or and the all right perspective, we on work assuming this and them a Meaning brand drive flare ups. headwinds that economic growth. business

First, nearly so which that is MyFitnessPal, away connected revenue goes represents that close all completely. fitness today the following deal, sale of the revenue, the segment of

we’d Second, starting back about two yet result healthier in the promotions to primarily overall expect top so meaningfully to points America distribution to will alluded continue by toward drive in near as support to and year. continue positioning, within region. next more in as our plan pull of undifferentiated couple of by we we our years, about to reduce end North XXXX discounts will on term results, certain some premium which margins And the our XXXX, on doors doors, brand earlier, well. implications wholesale North continue DTC, we line to heading XX,XXX begin distribution -- we largest finally, American expect we to to exit And next over

smooth we bottom and with color. manage around our gross too the and delivering as closing, And That's on slightly we've most is believe to the specific we transformational XXXX. of mass sailing a revenue, turnaround, sight of agility the that given again, arguably turn up financial better that, disciplined strengths year challenges from we'll we critical behind margin, of items still of have quality to one for once are SG&A, necessarily at in to it's framing develops. more out. of cost our it in line operational share from moving us to to capitalize line, of better we we reiterate our this per back the In these progress not have forward. questions. positive bottom But But early earnings expectations here the point. strategic, line believe we're on improving our the positioned respect expect for management, our critical when to and to operator our line parts around and And With perspective, proud our Next, your focused made. of to expect say interplay we that

Instructions] Yruma comes Capital with Thank Our [Operator Markets. Edward you first question from

line Your now is open.

thanks Hey, taking question good guys. morning, and for the

to introduce through product then start technology, new a Patrik, and we particular as you. product will So focus scale or business while clearly of for outside long growth that well kind built a you a growth? this healthier a some lineup? is to is that the start you to, also, at think rebase this now will Are categories year performer are the where cushioning suited Thank that Pinnacle be business expect next you take work term. base you this as toward have should of orienting there this seemingly And are

it believe tremendous is, us business. Good so that seen categories training our growth amount excited relates sports about morning. we be the the categories. is this and in our, our women's But in energy core is we've year we're of going is for we a that our some of team drivers men's are in what that to looking as there Yes, speak our still opportunity to to forward, very

women, bra, a in working both are for now. Meridian Infuse, us pants, shorts footwear shoe products, the different very apparel Machina etcetera. of We Fly-Buy that etcetera, and for have Meridian and number Infinity Phantom the well X,

as how to forward. play is in four growth growth talked about continue drive have role. and now the about women's be of we definitely big part see Footwear think to So, they marketplace, you going platforms, to terms And a the platforms we positioning really the our to And of franchises. last the to another three years proud accomplished of sits franchise at on things Pinnacle ability very seen brand. top one you've or And the have start through hub franchise the flow of of the going build HOVR so footwear. our that brand. will and on we're in over that all the continuing the we help, is to the a be And most expression that

Thank you.

Thank you.

comes Our with Randy from next question Konik Jefferies.

now is line Your open.

Yes, thanks a lot.

us So good reducing Dave, perspective you the XX,XXX by by gave guess doors, on wholesale some XXXX. I

what medium about, you from about mix impacting shift, obviously term? So what can a the positive a margin we should wholesale but think directly expect that do And how be medium about revenue we the just how e-com, to think that? by significant versus versus, be it a perspective that over term, we do owned How -- stores? does on thinking the your should be again,

inventory, a factory retail, best potential across, at digital definitely lead experiences, to drive we more leverage invest etcetera focused full for still DTC house company of consumer a we're centricity work approach, and own We're price, a give mean, on year. as in we to and wholesale fine at point are a a high from lot to next I Yes. not going lot We we're trying level. XXXX. where But, details do just of stay tune to got into management, partners. to looking to go unlock

focusing remember us even thing to revenue. mainly little though mono-branded is, one going tricky and APAC our for the that owned, to lot that's on bit through a a though, partner runs think are wholesale we're DTC, the in be stores I

the not from a will you but increase actual of So wholesale, well. full of as in stores stores see brand branded years, DTC mix view change mono in to of kind the may my significant those and the coming

helping it I just one on there question? just Patrik, it? breakthrough Got more should product? the sounds winds the on being -- bullish the much on been the marketing quarter foreseeable of owner other drive how growth are being women's the seeing mask, business. And in for these you're we in also been of mask at more and a just say, of What's be drive, few of It you're attachment of then the Thanks. that masks, e-commerce and kind within business you like where more distribution as quarters, to lately channels or should relatedly, forward? going isn't least has kind attachment ask lot noticing side, I helping separately, masked, Can an saw the seeing thinking the you to about the

Thanks, Thanks. Randy. Okay.

were women. going resonate with go-to-market brand. singular of we a the starting So know, both what of I'll was the over able year men to categories of start women's, the that with With we've across to our the then I'll deploy it's masks. you importantly, But fully result into strategy knew the and and switch first was more year. at with done all XXXX women's we again, very the beginning this strong message Remember, that

with of right product we on we time On had better marketing. the that back that the was that, delivered and also knew

is to starting seeing So it to our this is really what and you're women. and relates as fire go-to-market really

said I successful products. been, different across have before, many as We

just for is on And, definitely So interesting an the us, across, you're is our for next athletes. product But it consistent the the execution I that there. approach. to is it's our going to how going mask we it’s decided women's see so the is spring, fall resonating for one there now play isn't that's both it's, summer, one through we in growth it that It's head into year. genders. entire continue started and here it's something now starting one of in because early just it And or up. been it is very there to And be engines. isn't made through was ultimately we something lately in to it's there The was think believe go-to-market really year brand toe that to mask, nice us, see

and that approach mask as a out use you a with fit, it market Rock” version actually of the It's just the with great it that kind functionality, an if like high working the quality So the which more tool mask. number released we product, “The and last high mask one and colors. is some us. of that with differentiator has for a now go make with is been different a really sports you're also upscale you has to successful And as our when well, as been

coming where be in to a out segment that. we us, that around for to people things we're based the that's do, of the capabilities have just the able looking itself building e-commerce are of whether more coming and terms you're loyalty. platform that platforms And to working you'd like one we convert CRM going of that if with and So new inside we're buy at the are in we accessories, as onto to -- on our the have that products mask,

going there us opportunity big for forward. So

you. Thank

you. Thank

Our next comes from Capital with Simeon Siegel question Markets. BMO

Your line open. is now

Really longer doesn't back those taking opportunity quarter, where and you you're opportunity Thanks. Great guys from to nice thinking Patrik, have Good where how your the progress. job. about you brand, elevate guys. to as Thank here, any can lines, continue to morning, it as, about speak Dave, as but opportunity. EBIT lies. thinking on help the next term a be margin thinking just that through recapture And you. along step as you're then you

you're and some do our a to of that running through to line. $XXX. -- discounting, margins This lot that year, command the Mark selling launched X was to a more I less more PR to say, product. our our that year able we're areas we've year then well. pricing, two highest Training that to got able able ever shoes, Shoe, is in premium a do the for of at more you've where we're a able clearly the the success proud $XXX came the is We top all very the be we one your year of In And, would with price of out big for things the actually X And in premium that of really them of us, to Rock price shoe Phantom of be that seeing with which especially terms in revenue it, in by we're be in this In positioning. footwear. we'll launching taking early grow terms of started

now discounting the Maybe more compete less is margin, the the to combination us. color you So for most add help premium on want up everything for we're footwear, going us, something in Dave? able that also that to is premium some across level, to proud of of. at drive with and very and being course, board in bellwether there, important And

our to we're as far years. may returning marching of been plan, we're amount DTC wrapping there's then about Yes. to growth execute be years forward. a much term go, so And next this relative we're And And percentage and more into to than that excited how we've business after effective efficient, And to of up term forward, to be cleanly of in and healthier very next that. kind to been a able prior and with much across off-price think about able and to keep we continuing to next well I fronts, a we've going margin, journey that running long going as longer of the about year. more done relative that profitable able have EBIT, the excited how fair all think to relative deeply opportunities operations gross as we just sales. mix channel restructuring year, few draft more transform to off There's, overall, year

across SG&A there's to to percentage margin percentage opportunities the from So revenue, there. gross board

which our year. and into something to we'll is, So is excited about at stepping making the plan to year March to longer plus, investor progress we're hit we're that our next term, get day. we next But XX% up absolute that

lot. job for year. thanks a and rest luck best Great, of the Nice of the

you. Thank

you. Thank

Our next question comes Sachs. from with Alexandra Goldman Walvis

Your line open. is now

profile question. wonder doors. Good morning, like? for the percentage my Are revenues to chains. had out XXXX North what doors? predominantly represent I undifferentiated small larger stores, us wholesale you those I on of those and do what question plan pull department to and of or XXXX thanks if they look taking the chains share another could what of with America And those

Alex. Patrik. Hi, is Sure. This

brand it's feel that that drive our we're the take. the that important approach driven. for it that size larger work three progress. is to we years, brand, the right of it the that And be for Ultimately, And will it it as us, you're I shows customer, every of we And the be of customers, of couple would the part up way way. tail able So be the we cutting. will across should brand say, in will next some will that be be is

question then That's e-commerce. very second related clear. is And my to

of in it we the be You've be channel, in of in made wonder to there? us growth are you to further offer what a update where on channel, profitability could see continued priority. I that if terms to need and investments strong continues that

over to start hand Dave. I’ll then Yes, I'll

is few the switch were actually aging, that this, quarter to aging, that XXXXs, great the our into already that new over able without very a of days. we ramp The from team been e-commerce new of more the an but added we'll best world, to it now apart course we're as platform from, into drive do happen that across is And to That practices programs of the well, platform of is to from ramp add able we'll around that the ultimately on you also as second benefit and the something And I'm loyalty platform our proud or one we in to able benefit seven a that only proud job. our to July, get very onto We world years be had accomplish in early Dave, to One half did platform something And back this the a The benefit down, running put phenomenal the less of ability heartbeat. for did which the we our merchandise China. very we and to market Europe. that will things in that benefit. throughout homegrown want in ramp were that up start of year. is to old, on missing XXXX. CRM I’m the we something?

a bit. a well XX% is great excited platform little add just growth new to that. e-com performing. I'll is with we were testament over I globally, and QX mean, in how And having super Yes, the

standing that strong we've the and into XXXX. that done a to team's growth around functionally, So continuing continue job our world that on a us year the And bit on to the expanding just platform. think well front that investment up where be forward really, as cross as been going front, diving key for in next year, overall, areas the And we And really QX, area leveraging also, in world capabilities phenomenal the point, expect little to year, be I the globally. on a really driving we just out move Patrik's as a the CRM income the front, this to then through expanding last and and and is rolling that loyalty omni-channel pilots well program lot into then around personalization it various also. we're and

of of lot a that Digital fronts a investing there. is So opportunity we're us. massive area for

we're excited So it. about

Splendid, the color. thanks for

you. Thank

comes Our with JPMorgan. Boss Matthew next question from

Your line is now open.

Great, thanks, on the progress. and congrats

Matt. you, Thank

Matt. you, Thank

a America on and circle not maybe beat to dead Patrik, back North here. to horse

to transfer, about really these base as by cut as see, to revenue that end size direct-to-consumer best that relative Is the you of up it size how in you the relative I now base XXXX. in guess think doors XXXX? the to think question Or guys cut and North peak? billion XX% targeting growth? a to about the is you're On count you of market maybe the are sales revenue to making the America best it $X.X door

Yes, to it I want very I all, grow to clear, think, America. we're of make North just going first

to think that's incredibly important I state.

about is to I today. to we that exact believe be think of over The measurement execute going growth prepared, able what change the going goes going with of of grows to But forward. mix not growth different what we're back, talk composition here that time. we're and a course, to

of we North And I of America. quoted partner. is equating because But a I point at we doors or may correlation coming that XXXX but to down, a XXXX percentage you're same know this think, and I that in wouldn't a of have to is kind total tale a piece relative that of doors big a that translate it's smaller there to that revenue

give more color So at -- that our next we’ll as on well. call

say I is everybody thing world, is, course, about all of Exactly. would of What for we're around overhanging of COVID. And the ups call flare other us the I pending COVID around any this right here hedge talking here, think flat right. there is, the on massive

known not at that's point. So of this course, of that's course

up just SG&A a on then And Great. the follow front.

XX XX restructuring. cost So year you've savings this million to million guided from

next I we next should dollars expect down think As year, be reinvestment flow SG&A savings. year-over-year? next guess to year, with of you've multi-year look we cost terms about SG&A how versus in said, through year,

want be to on bit to I we're you At this more here led We line you. next below line to in down the areas that a to XX top we lot amount But know, ready million out will digital point, get not we're far of the But certain restructuring give little be careful also cost front, with on etcetera of in to able as front, we year. international higher on as for on the just than there, up innovation driving with it's ready items. mean, detail looking year frame the savings still things be of color tidbits XX a early. of next significantly to to quoting the To this your growth. on invest point, million are plan year. we're

as see, that revenue for development bit So a a absolutely call. But we'll far not whether leave backwards year. bit next little as we little be or will grow or next nice going the go pretty or SG&A flat to there to it's a

again. Congrats That's great color.

you. Thank

with comes next you. Thank Piper Erinn Sandler. Murphy question from And

open. Your line is now

mix morning. do of And you where growth year? following on over by XX%? end up Good the how digital by down region? thanks. I just had then Could e-com just a the Great, you question up breaks see the that share

all Yes. I down well pretty mean, regions. the of broken e-com across really growth the is

pretty one I with think in growth really from not -- that's perspective, healthy an there's e-com region region. not seeing every especially we're this There's single struggling current in environment COVID. at all, that,

forward. excited made how that well moving and we're pretty So investments there the we're we've about

by the of mix the digital end year. the on just And

a of this point. We're not actually digital kind at mix giving full

Okay. Got And it, then… understood.

But it higher. would be

a helpful context. the curious downs little bit And parts moving quarter-to-date, Thank if of given a comment quarter, lot the in you. fourth but on more contextualize I I'm demand then particularly gave, Okay. on lock know, that recent can was in you the your Europe. it there's you improvements,

different Sure. there. A couple things

when We COVID the had planning. we think our uncertainties. still were partners. expected, that I we arms in July, wholesale call, our remember demand previous And ultimately therefore in as did better very to that we than our we around got conservative getting were back much last saw

consumer front, own direct So both, wholesale our on and to the front. it on was

XXXX wholesale to So at to up we translating the better in, were some use actually cancellations inventory this orders. ended less able the sell store also, of better unfulfilled through. QX We than point. the had expected closures on sell from that the And

came sell-in would. also And You from was know regional mentioned, which that those as which orders, promotions due delayed did in anticipated, in even that slightly North circumstances and canceling we at perspective, going product well. was we again, certain the an we expected sell-through And From when maybe they the to was well. they COVID also upside than weren't the we of had but majority momentum than discounts EMEA America, so originally anticipated. a and better meaningfully, less QX because

XX% till increased also was our have we down now XX%. the XX% result, expectation a to as what told, originally all to from QX So down

excited momentum there. So the about really

you. Thank

Thank you.

from next Sole question comes with Jay UBS. Our

open. now Your line is

to thanks sales. at Great, XXXX, whether what I the much. down percent so you off-price XX us peak want to is comment of ask what like the of was the X% at about off-price sales was going at peak? off-price whether represent it to be tell that of Can

in is XX% But, We was won't Dave. any give it exact percentage. never exceeded those this the Jay, of years. it Yes,

year. to XX. certainly estimating was to it all this way below So we're the But down that the land it four wasn't

get X% think number go And can beyond? lower as that and XXXX you we into

a there's think more opportunity little probably bit a I there.

to the stores as for But a well X% I make the a a we it have year. newer pretty our think further next could. can we leverage think getting spot customers. good bit mix healthy I comfortable this right we probably we sure our outlet range push products stores is in have experience way. a That as range outlet we right Can merchandising we're little the to just X% into good, of year? here

want don't overly rely off-price channel. the we So on to

So pretty healthy range we X% to think is a that spot. X%

And I say Dave's. just would on add of the back

have right, from we the wholesale some Under hard if other think about right have long the think. compared of mix to probably that a number a to as to, think business. volume So not It's Armour brand, X% And you that's course, you like we pretty healthy it, is that that as us. for people to of X%

Thank it. you Got so much.

you. Thank

with Our Binetti next question Michael comes Credit from Suisse.

Your line is now open.

Morning, guess year. of did the guys. -- XXX got, you've sales sounds Hey, look last EBIT we just high as quality got that initiative a we my million doing, you've thanks here of I level the of David, million margins planning, in on quarter. for Or as taking It meaningful plus over line planning around of you you and the job great on. XXX that like on of back EBIT period? We've sector. referenced have you can impact that the on early sight sight XXXX? do of Based the have level you're seen to the the questions line

call, XXXX to excited too. and some We're question. don't the about the appreciate on give We early. definitely So speak it's wanted to typically we color. future, But even look, this

America be We're relative move absolutely a to rate. to XXXX planning do. to in absolutely and forward of EBITDA and to work North in careful there. to continue still in we to dollars There's planning lot So XXXX. grow grow got We're

think And we of talked promotional fitness exits The mind to in of front. about we those year, least, drive need what about the next do less about, would growth. be sale like platform. retail just as too, at to headwinds keep don't we also some I brand premium we forget the the work revenue as of activity think undifferentiated on talked my then DTC we

that year. this away quarter, late So executed next assuming that this that closes that's in late completely in means quarter, that revenue goes essentially

up we're to being in give size the have all excited next to investor on So But back next more the you term things mind And right to call. then you day. at we'll long And of XXXX to keep and EPS we positive path got line sight longer the expectations. those growth. as on in to, growth details term, profitable slightly brand

Let me follow that.

some in better showing you quarter pressure, you're But feared? quarter in see the the very margin early on. sure as this much categories? too. curious, holiday gross you they're ramp brands to have said at at customer, I than as Are where look you going the I'm you quarter. obviously what's can the initiatives with brands remain some said I'm On you in some to some smart you I of fourth know given guidance, that, as But see all conservative start October. you type actions marketplace think taking doing promotions your the seeing third some

Yes, bigger we A this going out we quarter. QX is pressure do heavier fair certainly are. year-over-year. amount the QX And in in look forward than as we than so QX, promotional closing think quarter, be heavy to to it environment this that pretty was

channel. be though off-price sales based challenged we're QX, the even that could year-over-year, think trying off-price to on that into decreasing other sales we think that many also off-sells, so in brands push pricing on We

that licensing, headwind gross and on margin QX And in margin business. that's gross a year-over-year They've of mentioned little obviously potentially some we're extremely that's true XX% as piece year done high, side, QX So lower that QX. were I being a Plus of and an well. in revenue probably last of the comping. bit down ups MRGs,

the environment DTC tailwind costing chain supply mix of been benefits little biggest. lower product from for channel sales, three also driving. promotional of get of also continued a with that those headwinds the kind bit off-price being the are but bigger the So the QX with We'll mix and has

the mentioned, they're be by offset more view. environment definitely there, couple favorable a So, the going items current especially to our promotional than as as but negatives I far

Okay, lot that's for Thanks helpful. really a everything.

And Kimberly next Stanley. from Greenberger question comes with Thank you. Morgan

open. now is line Your

think wondering for back potential ask coming that about team then the thank in us wanted to Great, that you I a was inventory. way little much. sports, to XXXX. potentially I there that can revenue Good about understand secondarily, Is benefit carry bit morning. might you? so any if just for you the And

second inventories you And of fall half inventory third quarter mentioned I'm, the XX%. XX%, season by around you inventory Summer think of at the at I what's the that that here end add you looking cut by And or prior strategy I'm product? Is around Spring or sort the merchandise up XX%. plan might Thanks. with balance any balance on leftover have sheet?

off. we'll this tag And Dave. little with Thanks, Kimberly, bit here I'll a start him

do able and there for terms it's really their athletes it's are to trying really of able been their really, coaster, there -- Under been do emotional Armour In a give sports, It's think going to team rough pandemic, been for of athlete terms support that to roller teams been to a there. I the in sport. our of this lot whole and kids sport or weren't a out the the not that out through we've

spring, but extent we've and team in bit come of some normal, team really a seen the of off of this that year. back-to-school into this for So business it has sports season back though, as also of kind through the whole half back the of flux. has been seasonality in I and normal sports. and little thrown And of a a large really back QX QX, course say half, our would been totality

understand going are that speak same be mean, the spring next are means And really about decisions think We winter what sports to year. teams reality nobody on. of I the sports. we still talk making that is, course around later for trying, they situation But it's to I when knows. think I as

Dave, going because going we we're the how the to the that of know, a to fill to that I would I'll have of simply of is things in don't that to And in trying And bit just play today So are out. we're quality later I something think seasonality blanks. it's let dial be going in. good. say in And than it inventory inventory, terms little dial normal we

quarter of than we bit that the was is nice. And to inventory from because we XX% Yes, the we that anticipated. which tied than selling larger were better from that's that a perspective, this QX, obviously was up, able had to little use fuel and in which is at product portion bigger couldn't summer affect to we in. pandemic sell spring we a overdrive, anticipated, through lot a There coming still in time some we finished QX

throughout believe comfortable, able feel back where to with off-price inventory demand a houses out mix very also, channel definitely We the dealing a year. year excess and brand degree. to remaining way our right inventory. as we benefit with do there growth with being healthy decision approach and lower versus quarter. with for that But with going the still purchases lot ability of comfortable that are though, we leverage we progress half will That we'll And to and of utilize through inventory to end our reduce to land us we're the certainly inventory, address that. XX% next the uncertainty around right a But to There's now. factory a more

you. Thank

Thank you.

question next Omar comes Saad Our with Evercore. from

open. is line Your

wanted evolved use now. a give morning. to And organization's digital for Nice detail. guys. question. you quarter ask, touch can of Good I to I more also the Thanks little wanted how it focus love bit I the several maybe Maybe Patrik view context, you put flow where the to divestiture digital of cushioning for how is the about how in use over assets. platform ask taking the new to has and the and last technology my on us to data would years

think I Thanks. maybe little need it bit detail didn't said that it around more platform? a outsole rubber a

Sure. Hi, Omar.

as MyFitnessPal idea as talking we success there focused it was strongly skew the the with and and of the targeting. a focus that actually that MapMyFitness we've connected the something didn't to whole dialed all and get as great that of consumer apps considered sale to the And is consumer on that other connected and performer did, of more is fitness the the I'm more us had we we we're get MyFitnessPal towards our was really necessarily course shoe. and first So now and in about that clear length, that

speak. was So right so to Armour, under get to hard, thing MyFitnessPal Under also to great without business home the and to having to to a it but decision because grow do be their the that it's enables be for team able

think for I So, team that a it's for that the, great business, decision. for

it's Armour, Under which also decision one is for we've For now ecosystem on on building can a great the Under been because time, we focus doing whole what intent Armour.

that gravitation earlier connected. last now business shoe decision over of that that. feel the while my that job very And And we've continue do that to has team for especially to through do for will or that accelerate work So MapMyFitness core X us at all I been be has we fact to about engage. we phenomenal. was connect apps this that see, the the these and four an this our of the just talking a us, and incredible app, had consumer, just led things five that to ultimately, And we the can million better pandemic, owned integration done we that to where years, think part and the we've we the that has learned,

I'd that, MFP deal late thing in anticipate we One also an that QX. clarify closing is just

does giving quarter for include fitness we're a that of outlook QX connected the full So today full revenue.

comparable Patrik, flow. to that. on XXXX definitely there is then And was there's it if QX on a I question just questions So any think

shoe. outsole we it's a I because the Yes, have excited. not a on shoe, we're rubber there traditional very don't right, Flow with is. It's say actually would that

the of also one of weight, actually would there. other be like both to in is no of shoe in is but it gives So separation going cushioning, That a and the terms of unit. us terms performance to we like ability shoe advantages lot call out

think built advantage basketball be lot think ability. certain of goes separation anything there's that sports, as especially we've So a going you in beyond that we in and traction we flexibility. advantages that it's weight have about and before a in to real in And

that's phenomenal into about to be XXXX. excited And it it. about running very then to we're and it. starting going Curry's product as very basketball, in us, we're Not So, superpowers. also flow early HOVR excited this We're in but going that for said, very will exciting running. for us really is isn't because it gives a job a us a technology pinnacle doing that you that shoe and give we

it. So we're very, very excited about

color, Thanks wishes. for the best

Thank you.

Our next Cowen. John Kernan from with comes question

Your now open. line is

gaining taking my some that a to AsiaPac there. I the talked source that with internationally in share for demand sensing hasn't EMEA the in morning Wanted quarter. quarter. Hey your just both your there versus to for benefited And seeing certainly international, wondering, versus question. competitors. you're on know peers. and was EMEA pretty in was and shift you peers quarter good Wanted even feels a much. But Congrats had like good as to of bigger some the a expectations, your -- touch own And on were this of come up surprise upside thanks quarter. sure it or

we head how then should international about XXXX? And in fourth the think as So into we quarter?

John. Hi, is This Patrik. Yes.

So I'm very teams that done. of the work have proud the

us the a around there's a APAC, and it's the more performer that both based strong I think EMEA. in the on approach products now the work good focus the this we've for in And premium And market what's the the across same over We're go-to-market focus is last right? that three is all same, strategy very marketing very the So the that really, that deploying done XXXX. we're into world years. with working. fact are

example, The it they across world. The the So worked pants women's world. the Meridian across worked worked world. for Infinity and Machina, the the X across Phantom

also and from success performer, EMEA doing both We've brand, premium good women. the And the stories are done run making also from it across APAC. done a has not market our job, world. last spent phenomenal the repositioning resonating men a that perspective have teams focus product it the few we're the the an in really And our a in really but head-to-toe just a So years up in category, key job, seeing perspective, now sure doing in there Europe. cleaning team

I right in stuff, all the back that terms year, doors, said doing partners in in to So sure pandemic. APAC, the of opening been that this I of that would would what's we having half make for conservative the in brand positive simply say have we're

So coordinated, and prospects is seeing stores very and you're premium level. had the playing as course. a the more there mono a well as is for orchestrated play our validating really we APAC though innovation play strengths at branded to focus as to But good performance, a it we what relates really in go-to-market even region out continued great e-commerce of our now and approach that growth believe across world, our with

actually the do world Dave, So I'm is the sales. you -- what us right excited I'm important that's, quality to add want to especially of something? now. about, And across really

Yes, early impact on quantitative color does in way, shipping more more spring just products little as QX wholesale a pretty to XXXX. big we you John, give we what That versus When mentioned, about XXXX I'll late your the question. a XXXX think mentioned. in

businesses, so And EMEA international America about have for you wholesale. in Latin us, true of bigger think when percentage a

a mix they're QX, a negative mono-branded though more it wholesale of whereas is really even wholesale, has definitely big have Asia stores. in that impact that Pacific, So to going bigger

technically of as timing that summer they So big on have shift. spring, an impact wouldn't XXXX

little challenged in just see you a America color, through bit that balance QX just change, you as because EMEA APAC we give favorable of QX. So more probably to more and of Latin move flow of the

great. end. Thanks. Best right, All your luck of into

you. Thank

be question our Stifel. Thank And Duffy you. from Jim last with will

Your line now is open.

guys. Nice morning, Good one.

questions you, for A couple Thank me. of Jim.

by Dave realigning hoping the of that just that? I'm you stand in [Indiscernible] in on XXXX you the is and interested expenses first, structure? looking forward on elaborate How coming on more you MyFitness Dave, associated Seems much color then of particularly elimination Now Can like can more what about greater to with you cost do I'm XXXX? where mean agility the there's to And expense talent your find the versus comments incremental? structure.

be the a XXXX. in most charges Jim, I to through expect that, those to guess things. to majority execute I commented we plan, couple relative of that restructuring and able One, Yes of our

bit and be year. a spill QX, into into However, will over of next there of of a that QX, bit maybe probably tiny little

year. benchmarking of of our against in best So able to and after ultimate each going we're next across the be into cost goal that's different really the and of really, triangulate to part continue each understanding the be areas. details it been deep us to here. we those execute discipline well to But providers in our the three to would for of impact And what of leverage the spend different go And that we're digging board, We've structure. really timing it, activities. how that does the then savings of

I final when in those no, excited really the it's And so to when diligent that's So we next profitable few And years. that's we're spend, we, operating significantly coming the going saying start I'm where And not we where that's, to we agility in talk the a really next what much done go And to And areas about. solid see necessarily about continue investing leverage just return that you really on forward. work be last in finally But will to model way and think pieces getting transformational very, over SG&A can we're the us that where year. and understanding are term stepping year, that, really together. backwards see we're the And growth. very have for you'll for goes understand be spends. prioritize place, excited about. those really what back long we

SG&A has feel us of going our costing work a being we've to to with mix. SG&A percentage the margin, regions. skew to so rate so incredible of that far with then is talked vendors. the an over better be to increasing, And about well. And from higher been continued that improving revenue And we year. as and of also, relative significantly better DTC team or term, longer to EBIT come is as our better costing, does continue supply rationalization operating APAC or And as to gross and that able higher continuing fruition volumes gross see margin But what higher visibility, last the benefits speak one APAC and then for we chain also, the working region growth has a doing, drive and still next to the in year there,

and be more going a think agile, drive balance done couple also there. able we've things to the there. ton able to sheet we So on going be be more nimble, we're different But and to a agile, that through solidify to

So we've we for got a us XXXX. as going step lot into

you use the Just balance how flows are proceeds balances? speak plans disaster debt one the sheet. and on more about of question thinking about for from Can cash reducing quick you and MyFitnessPal

X.X use revolver, We're a got till end So we from perspective, of the obviously, that move and that the we're, hold working both outstanding to our on and continuing to on favorable until wait back call. discuss at year different going cash. how planning relative to forward the more things a We've a high that we but cash to zero on position that next to lot we're balance through, cash of billion next be and we're call. and then on the going in sheet level a very were

Thank you guys for the update.

Thank you, Jim.

Thank Jim. you,

for Thank Thank you. participating. Ladies today's you and concludes gentlemen, this conference call.

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