Under Armour (UA) 10 Feb 212020 Q4 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the Under Armour, Inc. Fourth Quarter Earnings Webcast and Conference Call. [Operator Instructions]. I would now like to hand the conference to your speaker today, Lance Allega, SVP, Investor Relations and Corporate Development. Please go ahead, sir.

you. Thank everyone earnings Under conference to and fourth us XXXX year-end call. joining morning Armour's for quarter Good The information as made that reflect XXXX, Under available considerations may today includes view and moving its forward-looking impact of our current forward. future business for of business XX, Armour's February events statements that can included risks both Statements with the and the to that found in morning's detailed release, and be statement press this made which website today are into our are of SEC safe uncertainties subject at documents filed on harbor regularly about.underarmour.com. of due It's note extent results. business ongoing to and COVID-XX expect global important material to virus' we possibility with the to that long-term impacts and to duration on environment, uncertainty the on to retail the our related impact immediate respect continue of the could differ suggestions. from meaningfully estimates and historical descriptions, current results future Accordingly, results or and practices non-GAAP we in terms, under are call, defined may today's release. On information, press reference currency-neutral and including which morning's rules adjusted SEC financial this

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

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

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

and year-end call. and morning, to conference good fourth everyone, XXXX Lance, you, quarter welcome Thank and our

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our to opportunities SG&A our we segment ensure it positioned $X.X to to our our XXXX, leverage general breakeven In an believe not operating we authenticity most the drive footwear to and And future last And for Armour begin evolution. help strategic, differentiate and position we work energy support restructuring billion of and can cost and space as an ratio our foundation but creating a Under we us in structure, shelf investments our perspective our we've to continues expectations. Switching with year, central a product's realized with some wholesale thereby our including and many our to Throughout billion more from appropriate focus gears in top and ability the return are reached business to runners. At if is this for comprehensive accounts. scale a our expansion over second $X.X to agility the believe lies. meant or line this with an As for broaden significant foundational that core will structure term. of attributes, where asked to operating return necessary larger model specialty running help area spirit, running to cost operational optimal times long innovation, ride our structure consideration unique purpose performance cost financial we growth. key traction, margin offering, growth double-digit plan, is been will even revenue assortment, XXXX, we where second, instead, its structure within pinnacle of put we've within rebase

considering breakeven our press about $X.X is somewhere this we that return SG&A will our of and how certain our investments of release structure cost out to areas. cost forward. remember will efforts few these restructuring appropriately profitability and morning's XXXX. in to reductions. details efforts understand that overall essential Dave had later, they've our a we plan current With been laid moving and affect thinking now cost to When expenses it's Therefore, realized we're the cost have avoidance to mark. most said, around structure, to underlying rebased, impacted versus important SG&A As billion in continue elements to discuss in how it's or future That related benefits

simple cutting as gain cost However, as it's leverage. to not

larger restructuring of efforts, much early company was productivity made objective an now. ourselves be Within and to level realized. we mentioned scenarios, that was we was are to expected main our there commitments unburden never within than we when expected also decisions a of As those our

this optionality we on now which even demand. and that position, with impact same market that flexing we helping functions, our return our near improved growth points consistent visibility and in level business put, years our at us profitability selling inventory is on tighter also international change across may IT maintain to term, a an than manage plan the And appropriately greater and XXXX, pursuit therefore, we factors ended all service while making In costs XXXX. discipline tightly, much that of greater term, are supply distribution ago. year-end afforded marketing, customers to along and are planning a underscore growth. trajectory. driving a us us our keeping price fuller absolute As will dollars and These flexibility productivity increasing And growth, ability track alignment and we're SG&A in capable to invest should More not higher-than-planned was our DXC more with the the to and turns. near of factors, footprints. we continue simply for of more productivity our specifically, just our greater This I'd especially that elevating evident few brand-right the have with in managing the that and means in and investments eye our demand drive while in

Moving hyper-focused our DXC-focused the for better understanding journey even formats, adoption digital third up to drive house our accelerated and nearly we year, with the business locations. are and are greater With a our for profitable to to on personalization building the particularly and consumer athletes. concepts pandemic brand approach, stores, working In e-commerce magnified connections of XX% more in and priority, unlock elevating full XXXX retail DXC rates deeper to certainly has representing total our worldwide. capabilities evolve we full-price half

levels leveraging productivity driving about fleet is in the Our product. store, and excess through factory reducing our promotional business house clear to greater

foundational to connected channel-agnostic position, both best-in-class key serve retailer, omnichannel this be we all Under truly ship, our choose omnichannel our in the of our these to Armour. priority, this it's And value cost enable will conversation. work continues powerful long more profitable greater and to strategy the of believe understood executing across work sustainable strengthening to and something Whether drive RFID, and will the enterprise it's and together last over around pipeline rebased us term. to operationally, consumer tighter us discipline brand a operating experience journey finally, over shopping a acceleration aisle a to create in and that wherever points. From deliver profitability refinements, structure, strategies tightening this While maintaining or to strategically touch leads whenever being unlock we sustainable innovation long to shareholder all our we brand-elevating becomes help to across drop our term. seamless with strategies as believe management a Bringing inventory e-commerce the as ecosystem we to our wholesale, well a engage an and must consumers a what and growth leverage us approach is pursue endless do model

I proud our year, amid move with last to of goals, we has over efficiently demonstrated this with incredible Building into our that Under So an am balance near-term proficiency, accomplished year, ability in the challenges, to Armour marketplace carried And I on particularly while to wrap advance continuing hand meet navigate uncertainty up, as to over amount what XXXX them am transformation. and variability Dave. accomplish ability has of our last our from objectives. it confident about long-term that, I'll our to

the macro during we performance quarter a that be In a business stronger-than-expected and full global year, challenges. Patrik. especially micro the significant to Thanks, faced results, for delivered and proud of, environment fourth

sell-through way higher shopping a conditions. decisions From to Over to optionality and ensure the improved customer past that industry-leading revenue we mind, across DTC changes down $X.X few with call. these timing liquidity, stories closed shifted consumers in had that our orders and with expected I'm out results to discussed With and along experiences from through and million our we've was through we From quarter experienced into executing divestiture work billion than fantastic our from work pleased the starting to $XXX to years, supply demand This XX%. innovations created MyFitnessPal, challenging businesses. the prior Keep quarter we in the XXXX into stronger timing channel X% quarter dive out wholesale the fourth to last and the our down was accomplished year. the of wholesale our of impacts in due to said, of product XXXX. to let's connecting compared space which revenue, fourth to was brand on customers. higher-than-anticipated to order the better demand perspective, our we necessary deliver COVID-XX plan, Relative first due related flow chain about with

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

Japanese by primarily was finally, was lapping Latin Fourth due payments. business to expected by X% settlements offset which X% and due channels, from was fourth DTC our across I impacts better growth related the impacted be a restructuring DTC well primarily driven COVID-XX XXX our and XX% will headwinds XX.X%, with down Fitness the quarter, consolidated train our basis down offset this was within quarter COVID-XX Our sale, down XX%, by By XX%, Footwear business, sports within our driven negatively by including partners In included was strength These onetime sales. licensing Fitness with America by note efforts. was to minimum by partially million North of It no gross all driven than business XXXX, regional in was e-commerce apparel America, will off-price Starting lower driven by impact was revenue sports also to in reduced partially by by first impacts, in of the Connected down to strength be partially primarily by revenue And prior Other our by MapMy the was year a accessories the business, XX% finally, partially Revenue perspective, the our category. COVID-XX. X%, revenue business timing From business X% which our and segment. increased reporting royalty in impacts, declines up from impacted driven in e-commerce. driven in completed impacts following type, by American points our down negatively offset result our X mid-December. the SPORTSMASK. sale we revenue $XX offset down longer product growth, as segment. Asia Connected of partner. growth DTC in all categories. declines team driven mainly growth team solid timing was our segment quarter This margin up platform up timing the to were North business the in by the COVID-XX. that EMEA, mentioned Pacific quarter. of quarter MyFitnessPal remaining in was And important previously as within X% In e-commerce Corporate being with is in

gross charges, driven margin Excluding from carry adjusted growth. lower mix year-over-year points sales, to towards restructuring a XXX basis which positive and a channel benefiting of lower approximately heavier XX.X% XXX DTC, points by increased and basis gross distributor strong mix which e-commerce included margin off-price

and significantly chain driven year-over-year supply included growth allowed In basis quarter, to tighter charges and by certain for through XX efforts markdowns expectations the anticipated. X% mix primarily expense decreased the of in and which to SG&A considerably Additional restructuring million in than in our Relative increases improvements $XX to previous sell driven of positive results due and us costing expected assets. to demand, points with spend impairments quarter. by were regional and we $XXX higher-than-anticipated than fourth experienced product XX long-lived initially our management. to better we the gross benefits basis as discounting we sell points our million restructuring fourth margin had related APAC recorded less of quarter,

in $XXX of this to million. restructuring total reminder, and As plan under pretax related to the charges incur million we expect range estimated a $XXX

and goodwill. in and $XXX million realized the charges and related year, long-lived $XXX assets full of impairment from For impairments million restructuring we

most remaining We the first of quarter. first our charges expect the half the charges to in within coming XXXX restructuring of with complete

million. income fourth Our operating quarter $XX was

income the was earnings Excluding diluted we million. tax, or income $XXX $X.XX restructuring realized per $XXX operating net and million during of quarter. After share impairment of charges, adjusted

MyFitnessPal. noncash restructuring debt adjusted in $XXX $X.XX deal-related ended amortization senior adjusted From discount perspective, sheet equivalents, or per in cash the associated convertible as billion inclusive the balance with Excluding as to charges, our million diluted well related sale and was of quarter we pleased cash income of the fourth share of on for of our notes quarter. $XX MyFitnessPal, the a of $X.X gain to the net report I million earnings costs and with the sale am

on major greater seen adverse recently moderate or assuming within how North color full to by more in we've Concerning we That demand We with continued significant due increase year for pandemic. than the recent as we business international remain also had are impacts to revenue, business revolver. billion other single-digit trends in consumer the in increase macros no COVID-XX. our that cautious rate quarter new provide shutdowns finally, is we rate the improvements a high-level are inventory meaning prior and most to our million, to thinking fourth $XXX high today $X.X the borrowings other positive about general reflecting a term economic for outstanding the our in on was business we year. the we business compared relatively said, given business. near continuing retail our followed or planning our a the Therefore, have our growth COVID-XX unchanged anticipated, with while progresses, single-digit to XXXX And expect some overall outlook, due and I the outlook high year retail high-teens uncertainties under same the the landscape to XXXX, marketplace America respect no for predicated providing the will XXXX. been Relative compared we're

at some Looking our included include serve outlook following. will the that headwinds we within of XXXX, things anticipate revenue the as

MyFitnessPal. would the of First absence be

maintaining against point and discipline, about to earlier expected inventory current our Patrick's to plan demand. and planning we supply demand orders Second, management constrain

perspective, which help operating including XX,XXX in strategic by XXXX. finally, the to X,XXX models, about shifting previously X,XXX America, as distribution, to begin America, thereby half model certain starting to expecting plan partner to to Latin countries we're we our end with but certain wholesale a XXXX back doors, North Third, changes should to several revenue in primarily closer And undifferentiated of discussed, of in distributorship the doors win making negatively wholesale exit mind half will quarter will to to of we close instances, impact demand year. that wholesale, will and to premium constrain we to third have continue revenue visibility And operating the finalizing tightly, we in into the our it's only look recently to manage orders our improve in started quarter. within more channel Patrik now return fourth the are as some From bookings have take limited for mentioned, just keep inventory to a growth. important and Therefore, margins. back

means All we taking prudent and business to XXXX. managing of a business retail approach e-commerce's we From against this this a expect perspective, to are outpace forecasting from DTC digital is comps year. our up growth strong as our

on pricing a detailed, gross believe rate full have gross prioritization we greater appropriately high be margin For discipline being XXXX efficiency margin our highest in to business. GAAP benefits investments as instilled by areas and expect which gross and and place cost slightly from long-term XX.X%, the approach up largely our basis, drive a supply rebased with an growth into we MyFitnessPal, Patrik return-based perspective, that believe of we support the return of chain sale a have our have currently the the the structure. more we processes deliver From opportunities. was year our And offset should SG&A we improved to margin adjusted against that

reported $XXX we are which adjusted $XX income loss be to diluted operating the approximately will take $X.XX to million us growth SG&A reported share support or marketing growth However, With of operating million Therefore, diluted we $X.XX. in per to to million, year. like require expect share will on approximately range for to $XXX per to expectations. earnings the income adjusted continue $X.XX and of critical about $X.XX to a and international to all million areas $X slight of that reach our to DTC, planning considered, us investments

Now quarter to color provide more on the first little a bit of XXXX.

related quarter currently $XXX up flow first fourth are that to and expectation planning XX%. chain COVID-XX of order out This be changes for timing of about earlier. million approximately customer in XXXX impacts from of includes shifted to quarter the we first of due timing orders We XXXX into revenue supply discussed to that quarter the

pricing promotions, up gross driven product to XXX the lower and DTC costing primarily by basis in continued prior about XXX primarily to to to related points chain compared the expect Next, we margin improvements. be to supply prior related year to year, benefits benefits compared

operating expect these by bottom the million. $XX quarter a loss of $XX of the MyFitnessPal. absence be We benefits will million we Bringing offset partially to line, to approximately expect first this

expect be planned approximately impacts, income Excluding restructuring million. we million to to operating $XX adjusted $XX

us with visibility forecast middle second fiscal new year, namely fiscal provide the business Excluding adjusted we restructuring, earnings to year greater moving to changes share. on this And for end the from annual Under of in of being weighted half heavily finally, April and we per become before revenue announced more subsequent change $X.XX it we Armour's nothing expect decisions and plan also on X, outlook. to about year, providing calendar year. our will of believe quarters December of in the March XXXX. will Mechanically, effective Q&A, relates year accuracy fiscal diluted XX initial this strategic change, morning putting as those our this our to XX each our Based This X XXXX.

a expect X Next X that period January will through XXXX, or runs cadence. year, have to in XX, X-month quarter May we transition which March current quarter like first report our we'd in

undoubtedly We've target go-to-market, consumer. through what us XX, afforded navigate product there closing, journey, Following through no have March our flexibility X, made period, will XXXX and an progress against we increased focused to optimized transition agility which year. unprecedented will our reengineered run our on reporting. well-defined and our transformational was innovation and engines In year fiscal XXXX, fiscal XXXX. full that XXXX Accordingly, great and begin our be April

protect protect drove to Additionally, significant the improvements continued generate actions strengthen our and we took this liquidity. our cash sheet, to and balance in year ability

back to approach and that, to That over related appropriately in Moving our disciplined term. the growth your the for to profitable achieve our COVID-XX. said, our given sustainable, we'll the maintain approach remains uncertainty put position level in strategies executing of long the operator Armour it possible turn we will forward, With best cautious, questions. to high continue Under

[Operator Instructions].

question comes Duffy Jim Our first Stifel. with from

the dig leverage Dave, Great to which growth, business. pencils on the want some SG&A. implies growth. progress I single-digit the to revenue on SG&A in with low

to talked And expense For there? operating how the in then on in where much million expecting will the you $XX the for you Where do And talk How can XXXX, come build restructuring 'XX. you in from $XX savings you XXXX? this you million savings restructuring SG&A year? deleverage with more marketing about do Are splits see see from overhead? more the year? about for to

as been the lot win obviously it will to like for drive a return business, revenue of built forward years. cost cost IT margins. areas we that putting operating and productivity greater more area areas and from And over we've of larger take driving a retail, a But of Jim, our is to work kind this we leverage revenue Yes, structure of into to going marketing, these the be -- and able efficiently perspective. in win should higher kind double-digit

manage of forward. $XX million to making early and going XXXX. 'XX, in in us benefit areas our our now sure a discipline marketing. to SG&A that to XXXX DTC, into to are that about I international investing in say leverage place on But help operating would execution of kind on about of of million we activities As talked the mentioned, based timing we some we're restructuring income better and $XX continuing we and key processes have like we've relative going to and revenue got the there keep growth that are

double reinvesting when benefit about that, especially is can the numbers. to think we some You front. that, what's But in going are the you in marketing again, XXXX of assume at that least

but in continue high as XXXX, percentage say we 'XX and invest pretty our be momentum keep area year, of a higher are exact as giving in that we're probably percentage might but the of a revenue. to an I not potentially marketing, brand not be than really stay grow prior or as it to and was to going this at it's want percentage so going. going a as healthy to we investment And it would

'XX leverage well. as that seeing we that's seeing, we So we're into as what forward look and drive to continued

a eliminating costs. Dave, you've you've -- hard fixed talked And lot of work done on

the few to about flexibility? examples changes Can talked of the capacity you that that flex. you give a give You've structure cost in enhanced

lot mean, things rebased forward. and that that people a we us cost definitely a Yes. say I couple is flexibility gives a more would of now, from going are I perspective,

In that marketing that we've alleviate that we the really addition, a marketing there. bigger to longer-term making to a get areas allows have of much us return And relative from to the deep war roaming marketing weren't and we've the contracts there we're kind gone front perspective, and nimble going been a of out of on in deploying chest be trying work the of based highest benefit forward some of sure on doing. that to receiving

other a whereas down back more really as seeing considerably, we're Some now is CapEx in areas investment high CapEx becoming But 'XX. it depreciation of tailwind prioritize that well. levels have has to depreciation headwind committee like which our for on slowing even be to now nice a 'XX, us, benefited, has spending, used based diligently and our 'XX, been worked really the

and that we that make into the under T&E now, leveraging places of in investing a we're go we've areas 'XX. been the going right we metrics it spend, of discipline other So keeping are around areas and there's control forward benchmarking other to instilling sure but addressing and lot right as

comes Deutsche with Our Trussell next Paul from Bank. question

execution. the on Congrats strong

revenues, color maybe Under the can the more -- impact provide or view quantify American of market? count position? off-price the provide of you're seeing First, what how brand in from in momentum you on in reduced where can of on to channel speak then inventory conversely, the Specifically, and an sell-through. full maybe you Armour is wholesale limitations price updated an And terms North to the positioned positive also you supply store are even

this Paul, Patrik. is

to As call to as of demand half doing we gets and we've the and overall doors in the as to it back wanting efforts to doing that, undifferentiated in to the year customers we're relates the fair been our America, part and that pullback to be really them allow we're North some underway constrained the that actions. in that what adjust XXXX of in predominantly

us more kind doors shelf other for to mentality back. ways the appropriate earn we believe what of is in to be and doors, in winners us, -- left we And will we'll going the to we we are when that that of are really where with journey we're X,XXX year. also that of that's out be get journey can X,XXX doors with feel this wins X- where win space what half a And there. with X-year that for starting back feel through we So

also for going merchandising our So our that's It's important really an strategy important segmentation us. for forward. and

it a things in will combination building the position. about premium make terms So I more of that, that toward my effort in with all spoke those And to sure we're help direct-to-consumer in own as and full becoming outlet in going forward brick-and-mortar and as America. enhanced here well our a price our better in into as North positioning putting we're an script that e-commerce well

And is as of And it's to full-price to talked so terms that it And we already brand. journey. already by together elevate time, going we we some into do that step future. more initiated to in happen step. selling. go respect of the we're over of we'll about some and year, All as happens seeing But the to what continue a last it this relates

that. kind mentioned would down kind is been on steadily off-price add, past I channel. third-party of on the of proud working definitely we're we've and of, Paul, And which also it over couple one this you of landed years, Dave. where we've That's the

we've at we mix landed on and got XXXX, business how a total order X% our now discipline we And lot For there. about our of a tighter manage inventory.

bit no improve revenue perspective. XXXX, maybe for it that we should But mix we headwind from little longer more a believe a probably for be So a us. can

are we too. where there, about excited we're So

this just expansion in of were on in And to the talk year? just keep leads gross XQ. that Maybe then takes this the past follow-up, kind should and the mind improvement of your impressive margins just we puts slight that drivers through period the and

big our much of within of mix we off-price business Yes. because had was lower it sales. had third-party DTC mix a I we of lower also, then QX But channel versus percentage higher mean, XXXX. QX, mix of part in a distributor markets also and

over with some a really QX. solid to for mix So that continue see a in we all supply work perspective. But lot about channel talked come about area through SKU then us the consolidating the that continually area the we've costing vendor that chain year done benefits big or rationalization, was And from we've also, base, last with our a here. really so and seeing we're

of QX margin on from little region. in region APAC to chain mix side we excellent the of very relative excellent, benefit APAC gross also saw the then being So front. work kind And highest the a being bit and that growth supply with strong our

last for those for all we we us our helpful than and obviously was than It things were and lot So outlook due that due promotions And was had of to lot a sell-in QX. expected the -- really on better a discount given sell-through. in to sell-through call. stronger less

product also, when I in seen you for pricing our in that's supply discounting, to benefits 'XX, was expect the towards lot that on would as we drive really to would continued continue high-margin into going continued costing, the be But mainly we premium to though, and that from MyFitnessPal, front back some Those XXXX. versus improved continuing XXXX, work promotions which think the a pulling us. around we've offset slightly we think largely expect DTC XXXX. that's chain be about in of XXXX, by see will be And primarily we brand-right to as business growth. then and a up really efficiencies, margins sale

mix So revenue. factor has really that X% to margin. if because the much we've out, that of then of in pretty kind that that dramatic gross a of And pull offset year-over-year third-party isn't a off-price now you normalized on range X%

the for back slightly on of continuing the by chain outlook It's costing. being product sale to with the largely efficiencies XXXX, it's year-over-year. it's pull our again, discounting coming really of MyFitnessPal So offset and supply promotions to -- up

comes next John with Our from question Kernan Cowen.

Yes. on a congrats real to Excellent, nice the finish year. and

John. you, Thank

you, Thank John.

remain ensue, you better you environment? is and would end point, once you and improvements what predicated the normal line. general in compel a -- and global only to come an to Just you there to on flows retail start what Dave, this in curious, like said chasing starts outlook moderate a cautious just momentum is chase that some retail. into macro compel weaker into does recovery I'm feel the your to on in at pandemic recovery a it really

Yes.

of hand as that's mentioned, have things and a about in orders I we piece I a think there's on QX from timing still very is wholesale for our that, of couple think side, the perspective a to there. don't business. many obviously big yet One

being cautious little bit perspective. we're a So from that

very creating is still world the COVID challenges point. center and and Second, still this at front around

say are demand the better to I We've we be we whether a word would get through I in growth, orders to in so able vaccination wouldn't constraining go QX the is to the I is visibility brand-right little couple and reassess. And we talked that the about premium we'll check, get thing months COVID then third and bit. place a Under say say necessarily more be as of and and But next chase therefore, a more would Armour. getting and more better that of feel we relative rollout to

chasing one those. Armour coming there do a the going are it see to of may that just putting thing. the and I so natural John. within we're in, the lot That's But Under And chasing think discipline And it's be right don't and to against orders term not you if might year. be constrain used, necessarily you're

this sensitive that, trying our pick not I want I'm to strategy our approach be and but year. to So to on just

color year, tightening into John, we tightening are sure buys, little buckets, those buys, drive ability buys strategy, think our In capability. functionality we us to and the we the also the a we we more at-once as all will initial make up that to the we be our are chase. important, what be but general, positioning. it's managing as of inventory appropriately it to more our premium helping replenishment, the it around think outer brand when planning, demand an quarters as I maybe In to give the relates to mean say to demand And all constrain a bit relates about

inventories won't a there go for really we situation, going a apart that's if it that even be important forward. where chase we the and up, So opens And have. us will from strategy

improvements see Got the can sell-through, it. That's is full-price we great. in which helpful. all Clearly,

Dave, pressured sports. Just footwear by you also mentioned being team

looks in has understands XXXX for in collegiate high XXXX? team curious like sports you could I big recovery if from sports school was team and maybe I'm overall sports. position Armour what school, a the middle in what hit general think everyone just us in quantify Under and the help

Well, maybe I'll lead in it, John.

football in awesome other events. are here and where cleated at be is coming look terms empathetic When First go a many area for our team our we horrific And about. certainly one for pipeline. athletes through there. that's and to we incredibly of want relates had of Olympics right, One X to product of all our and we enthusiastic it actually our young some that been year are sports individual really, they've I to and going year, to this the people of out what year with all, out things. with that We're it's say excited also both athletes, as this in soccer really baseball, innovation we're

back big that's give color, let's believe in deal there's say, to the back-to-school be, Dave, And a that us. sport too? want And a a that is year. to half season. of you thing, going think, positive a we do team So the for very little we

Yes.

business the is timing impacted 'XX. I into would pretty sport of in the from the was that that QX QX also think talked thing about we other only 'XX QX add team was I of one with shifts 'XX heavily

So I that versus we 'XX just when well about think mind as keeping 'XX. think in

next Randy comes from with Our Konik Jefferies. question

they And inventory first sounds to like conservative first of saying order where wholesale give half on various the it's the be for revenue some based you're for implying given almost yet lean. it annual be the like it year. me that back your sense seem Because kind to back started it I levels haven't patterns effectively gave seems on are cautious guidance can or guide the very just I to be you're of half. with accounts? But quarter, appears you flattish Yes. think the to for wanted XXXX trying you of the a the very, Dave, clarify

better, if consumer pretty, bit half of an you accounts a kind little product your such inventory probably growth easy the the some is see that I is could there. compare bit where a So to and feels back little or stronger with resonate for starting there's the guess, event these compelling

So about just curious on how you think that.

in about Yes, impact and actually talked driving lot our back pointing that went you're wholesale a 'XX. you into could relative give headwinds I growth, a think inventory from as premium half. that And Randy. we us that is QX on have little heavier the you're fair. momentum to of remind of I QX, a I Within QX. partners, brand-right what we when little are bit we And do mean, out But your of right that, mean, a spot to us the lot when a bit point, think about we've those that levels lean want of about to increase. a QX, could

size, being the moving where America countries only it's a really move full And undifferentiated revenue impact exiting half model. you'll going versus that's for Some of are back you about XXXX, about think front countries a when as get in But of well. of this some changes into they're to therefore, numbers about think through even distributor a Latin moving towards we not year, North the more bit MyFitnessPal of America, although the as half the of impact. of in in year. business really that back year. And Latin And full when a work, in year in back retail America, not impact. distributor subsidiary the point little clearly the to when them think out those Especially models, the significant is being that full is a we happen getting in on not like model business full we're kind a Mexico you half remaining a more the other then demand-constraint that's more of impact, half

will a your we we COVID but bit especially the order cautious And point, half of because then probably help some are then have still yet. the planning little that again, again, in pressure And QX to keeping So here, bank improve visibility should we're with an don't being on implications. back and margins. have prudent eye

because is in now, I revenue sure in getting making we're spending this be of good we planning different. feel think not with. might we how ahead and Right being that So think prudent we're what we're ourselves

of I in the quarter. very with coming your think also, again, fair. more theme the clearly importantly, discipline and the that's words numbers through is And

across actual a inventory a be, little a on it's product some Just I examples on SKU think, So now How It on us category to maybe sounds effect. out maybe starting or a more the because give give it can positive changes in changes versus specific reduction? a within maybe last helpful in productivity you're the assortment. you these of example see to to frame improvements bit bit, that, quantification we talk worked maybe just like sell-through? us the just of SKU Can you've product year reduction quantify board. for us count more count a little having is to little where bit

to our come that's Dave. ago. journey give important bit being little areas to also think that way drive started our bit to We right initiatives heavily Yes, is mind. run, more it volume SKUs the blow it now back our in about the on in that mix year we between building relates never and our Randy, the without -- little of back little doing the with we there category. brand footwear it's are like productivity. think are drive product that or that a Those feel initiatives run where more a But our hand I because certain Patrik. And more color category, X, And I we just up. are bit through reduction not to we're I'll allowed ultimately a our start, that, increasing over history things and investing the liberal said X we SKUs. women's it margins. and are Having I years it I'll as that category, into, want areas expectation SKU bear to

it I think I go we're to in as continue know into expect areas. the well to evolve certain 'XX XXXX. go if Dave? something beyond balance right. for So But right want to as you now there, I we we now add balanced 'XX is and don't right into

as well, you think pretty think it covered call. don't we I to into we're Patrik. more next the really in I going at No, We'll come get this a point, point quantifying. probably quantify to be to

it. performance disciplined we're about view styling a see guys of is in of starting looking comment have move research, at more fashion is, that your inflection Just any one a towards of fashion a there's an And last on in athletic that? always styling styling? towards see industry your in -- more our your And performance. on in Can the staying bit focused thoughts in Got from terms you -- to talked your versus performer. quick little there. of you Do who curious customer you move that

Yes, Randy.

a good think but based So It's apparel different leisure this COVID balance on we've There's seen is way. influx also what on. starting in not between been use that to a the really certainly has And a been with the still of just people journey, big science consistent. going again, time, I art X. during

general over, just if there's Under point, into terms a aptitude the think of athletic at certainly has It's wellness. more that's of ready-to-wear personal lot that and shifting the wear innovation. moving over authentic I in Armour, more kind for performance about of you that And fitness, been But you like, street, in from of been also the brand. simply garment. as We're That you think a stuff high whole performance comfortable resurgence right? driving driving is home. fitness an an

better And without. didn't that to living you We're Our you you mission them imagine have can't and is that building doing need once better. else. anybody than we're solutions you make know performance

is what to starting want you to you invest for to get And And continue better, as get that more help consumer before. you're to little us if And brand them right going really that, more to direction think have want And Armour if Under our the often is there going Under for see you. that I people that's -- a bit journey. job than So the believe the are willing to now to #X. on I here product job we'll that's at believe forward. Armour, the right is now

Randy, with out, point and product. need our of from reaction is also. the our think, we that performance too, beautiful that's it's doing excited always the think maybe that just to and driving excited as aspect we're product, we're better DNA And I about about we I to as make are And also front consumer as better something well. sure

Wells comes next question Our with from Nikic Tom Fargo.

lost strategic in in thinking If exit to when your any recaptured of any just those you kind about other wondering, of channel do up revenue of so, guess elsewhere? of think any in think your think So you channels? I'm sales I'm of term, make or like wholesale? doors. wholesale it's the DTC I get of kind America long I you the North ask do just you the

think Tom, is the distribution this like, we eyes consumer. omnichannel way approach, and you really model through that The of the about is if Patrik. our our

we our our the think I where where be model is way to decisions should see And ultimately. it consumer should we drives the opportunity we much be around when be, around in that So an terms really investing. how should of should Under journey, there, we we Armour have, refine

of because opportunity omnichannel is an drive expects the when we, connect drive seamless why with to want brand, as engage will do us consumer to the reasons to consumer, we make that the We possible direct-to-consumer consumer, so. also to in way And a best show one that's consideration, for important And sure also is opportunity. the that conversion. the have to up we

make that decisions on we the that. So are based

with the future around answer your the question our to growth So in consumer. growth, comes

ways the undifferentiated the there. ultimately, that retail necessarily how So that we us journey. going we to And figuring is of to that is do part help out don't are get believe the

are with So if about and that And deliver. a conversation frequently we'll way truly we more do they having continue to expecting what to it is the progress. make consumer better that understanding well, direct us in

I Understood. much ask, cash as question guess, And balance have I could now. if right think sheet you? a had Dave, And you for never you as I

down cash the seen. that do I that sheet? billion highest think, about of $X your net you paying wondering think ever the about or position, you think debt, on day of balance a how kind net you have saving is How for I'm cash? of the it Or even debt about that think the do rainy company's just the think I you using that?

now, an be COVID. point of just be this an excellent foundation impacts extremely to be right 'XX and and any very we're through able have At in happy to position to beyond Sure. lingering liquid and drive nimble through

now. with until right staying very, very I So very would further get just we're COVID, past content liquid say we

debt we in consider you general, liquid future, that. I'll burning nimble our some and any hole having And other we're As comfortable not optionality things. pocket get and very now, means, in buyback But as staying further the tell a we into could by or right some very some it's well.

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

magnitude expectations and beyond? sorry, way and the next in benefits there the the And Patrik, opportunity Really, order for then, from continue you're give of could any here? you brand, to for gross the as to price the Dave, speak chain -- provide progress. for how year 'XX? opportunity congrats thinking Any on about you AUR ongoing some color just the to you the margin elevate pricing on supply could

Yes. Simeon. Sure, Yes.

it that making course, the Armour, way performance. different as putting the think couple a to right consumer. that you Dave when of comes it But amount not into the with excess, inventory to of the we're right innovating So AUR the for right sure through and also about the and said, the areas. way opportunity ensuring driving making as of right in One, product right it marketing in is are that aesthetic, all of place Under relates we're in different of excite channels we management sure right ultimately, our distribution, it's

AURs seen, happening the us, starting What's about. thing is we're approach up. the for the And half what we that XXXX, So this we've that categories. as holistic those call, driving on across to fact a is that it's to back we're talked excited about see that of very exciting, too, it's

not I the We're of it's that across sign the and the a is of health. to just AURs business, in starting So return place. seeing brand rise one think to

very excited about our process. progress step-by-step next brand make we premium. this into future in we'll seasons the could brand it year. a the and we're to margin It's reads initial and as journey. a this it's Now what think both make continue as year And do And relates about to

know I you something to add So want if there, don't Dave?

mean, of I would I second been on but won't chain front, improvement. we're great, XX your which an XXXX, I your XXX probably more -- to in just following basis is supply on basis and that number, has of I than gross And points something see we've you're continuing the guess, less chain we're than of that. been give exact it's seeing, points improvement, question probably part that benefits up on supply margin. The say

not we're into to cost soon. gross 'XX lot large supply expect When points. range. by remember, the in a which the But about start detail we year-over-year it's is ready there, impact MFP with and to you're that's sale, chain think to going a that very be to get base But do but that beyond, to So of normalize you continued improvements. offset margin significantly some fairly in product costing see percentage going

as from to and think And we will smaller chain benefit definitely supply the get It's perspective, a a then benefit similar that in a So to well. pricing 'XX anticipating on about as beyond. what decent start there benefit we're probably side. range

for you. little triangulates So a hopefully, that bit

Our with Evercore. next Omar from question Saad comes

business. a North ask follow-up question core around to wanted apparel I America the

a the follow-up little going on the on have quick getting mentioned then China. worth into bottoms. Asia-Pac men's side about? guys You on women's bras and Anything a And women's in I the more. excited apparel dive bit business on what's side, and happening Maybe

our to Patrik. Project continues This we're and is some there What well. really and well HeatGear in expand with Rock, men's moment, that about -- a our us. also Yes. And in segment into for to offering, excited success rush it which a a we continues we're of And there's our goes broader is continuing innovation. going do But has continue become apparel technology expand business being our men launch is new with product to into staple, launched of also also Every XXXX. some has helped we're work of to having, like that the of course, us to ColdGear both we're collaborations very is which and bottoms our really really to do it continued that started for product now lot excited we're about. a see to here in the which

the second the see things new as to first the in half a to it and category In lot we're and a happening lot ColdGear of outerwear a innovation. newness there's category, lot half also relates of going that. So the in of brand the in

a resonate tremendous to half with product that in core for men back we're seeing year. We a about And there, progress Meridian women's the that's evolve just tend the what right lot now it we've relates and the we're as talk our our of excited the especially Infinity amount line Bra. about made to because continues that there's of So to consumer. and

gives really with going terms recently, both across a women's, our which broadening tops for top is in cushioning of And then, and our the terms course, really that going platform, say core of So to more to build like, of And that's of runner. very the to it's the us continuing doing really and in optionality X footwear, optionality also UA much launched Curry into the for our if would And you our positive on in give us our well, new I continue we segmentation believe us. now are pyramid, play Flow in was of bottoms terms comes that's to story XXXX. -- appeal in running. and

So in XXXX a general. product of in for excitement lot

lockdowns then haven't what's of the a been as the Patrik. kind fact you help recovery you performing on And where it's where Obviously, be? That's China there helpful. quickly and and us it, that to are in related, remind of Asia-Pac. Can us you dynamics? severe the China strong you disaggregate again, Can COVID Got versus market. underlying disaggregate brand kind want strength? those And

down need quarters back bit in you a regions XXXX, up. And look little I pull saw past little we to Yes. was partnerships. get respectively. front break pretty continue good and I here quickly and were half better as XXXX, back holistically business to right? into COVID a Front lot impacted strength the we as And for QX. think half in QX QX. And the trending forward QX XX% we down about feel we're And APAC also of significantly XXXX. kind plan then we're expansion to good to rebuilding the a COVID by due driving it XX%, of between brand through. those We bit that the and mean, probably the half half impacts front in the the then from And door about and still COVID, the start very feel

We're forward to of QX hit some changed, COVID. a we relative plan. drive plan the The think with 'XX QX we're to I definitely So spot. hasn't but in in good continuing significantly holes and

from Our Drbul question last Guggenheim Bob Securities. with comes

chain, a you especially I great and bring how seeing product helpful. question I would the Can you throughout digital internally, That the some where spend what progress. that as around time this but challenges, and supply you are or I guess, -- guess be see you're business you both on also the playing issues have in of congratulations, little just the year?

Yes. Bob, Patrik. it's

our vendors now tightly survived, attention to with in to tightness And they severe we to with year. XXXX, to and as operations we supply have feel relates for that to our a doing that in making very terms of an difficult circumstances how did in XXXX business optionality making trouble relates but now the supply that throughout of issues job chain, we sure have the the COVID-XX the it that all transportation we planning it not right incredible or we that to We chain into work situation of and way the as team an the good we're things to one quickly position. come as became the job a with fantastic there. ensure to from turn ability ultimately, that of as our think we with I our called that navigate we're quite are really did the terms navigate out again and and sure perspective, of inventory we job, transportation it's well most our also that able the vendors, supporting because start getting are the into of

So our navigate ability Dave, something? about want do the feeling environment. to confident to you add XXXX

you are think some with managing there a But is it, well. through I and it I port availability right very supply on now No, they're experiencing We're challenges. our pressure chain well. obviously, container covered COVID. congestion, there mean, it some bit pretty little teams of

continue about good the being feel year. we to to drive So through able

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

disconnect. now may You