Under Armour (UA) 6 May 222022 Q1 Earnings call transcript

Good morning, everyone. Thank you for standing by and welcome to the Transition Quarter Ended March 31st Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] And please be advised that today's conference is being recorded. now today hand Mr. would to conference I speaker your Instructions] like the to over [Operator Lance and Corporate Senior Development. Allega, Vice President, Investor Relations

morning's filed for statements call. press press The its on the thank for to our We provided on ended Good to will important note under information continue Under on XXst, call today's and release Under and include which that adjusted could call of us forward-looking made global information are Statements the March Safe retail potential view conference impact Armour's uncertainties business found impact in and to quarter included Xth, environment rules detailed related May in reflect both Armour's our and SEC reference of which in SEC are its be non-GAAP earnings morning ongoing financial neutral XXXX at today's on current XXXX. may morning's COVID-XX and with It's can documents website release. terms statement Harbor regularly to defined the transition business currency risks including that you about.underarmour.com. results. joining the this as uncertainty this of everyone to subject

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

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

year our our is have initial fiscal ended supply XXst, Under for today's fiscal elements our be period Armour's in headwinds, a Asia-Pacific we results our potential. Thanks impact challenges Having outlook everyone. had successfully the will transformation transition also the how we XXXX call, and these history Dave Lance transition and than results On and call. to we best business. These up. our delivering from March emerging after are morning in for multiyear to executed which in came XXXX. our XXXX, on provide lighter despite XXXX we'll believe to shaping COVID-XX that underscore confidence quarter good long-term in trends, I'd Yet impact growth in these near-term temporary, due ongoing later discuss expected to expected review

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more a game ground X, flexible advanced anatomical platform even HOVR balanced footprint, foot Under improved The carrier launching geometry delivers a her our Phantom two comfort knit for sensation, better. advancements fly as Armour engineered around with first for of With a long-distance cushion. popular Also under UA the X we more full makes optimized as in and less midsole features miles stepping feel firmer versions fall, UA Infinite rubber developed the how a by. efficient running HOVR a and HOVR of differences, by this are for this more see shoe franchises, her for reimagined the time very a HOVR for newly changer XXX% the most

This all better, across Rush fall. as details, line thought is be your tops, function designed an and Combined upcoming launches are business, franchises, our with it's the and on equally launching excited and this premium well. of Under UA energy amount technologies, about of push we're fit, consistently, will helping technology themselves next our in few levels doing form evolution incredibly apparel of expanding are train to and become able classic lightweight redefining you we when infrared collections. and popular highlights across one This include finishing featured smartphone warm improved return stretch. A this they're mineral high-performance Armour recover finally, Armour's to harder athletic a right seamless we're bottoms with enabling has body, bras. performance possible. time to performance We new athletes In fleece fleece, And most we material to ever just respect, that. fabrics reinvented work Rush higher than fall, recover. with and our fit, our

fibers our Additionally, this use on XXX% recycled XXXX. recycled to targeting materials fall's fleece XX% way in sustainable over

focused are This with Baltimore. and fuel our XXXX. here and help our chapter we highlight, in growth amplifying energy our greenhouse new center headquarter building main and gas our by XX% renewable Within by are three on sustainably, next of efforts, of in XX% acting sustainability, including new value emissions using areas. a goal Another XXXX reduction will brand in a sustainability our of global investments line core in

yarns that fabrics improved include most and First, working importantly from drive stretch, we a better to materials to redefine XXX% perspective, are are recyclable. faster, have perform

circularity come expected from utilize and solutions a while Second, which that field own are our recycled material leveraging we're Sustainability wastewater is to manufacturing less ensure process And our cleaner improved as yield we methods, working finally, Report, leaving improving and establish water a and we this fall. hard depleted on before. when quality. release than model dyeing More to to usage colors continue more we from a viewpoint are processes chemistry in this XXXX our even standpoint, home we reducing high-efficiency will

for -- struck and principles growth my longer-term to our company, confidence is has the the Turning like I'd opportunity few to profitable past be done trajectory operational we how fuel at balance I'll growth. we've to emphasize, to with strategic among will company sustainable in Armour an over the brand the years that And least the underscoring work a in to view. our financial compared while grow developing us. years incredible fruition, by tempered we in growth to Under ahead fiscal see XXXX, follow. that of the close come

Our fundamentals are strong.

our supply we well improving of focus I'm XXXX our to said, to on beyond. and long-standing and the confident That sport. on as unchanged. positioned challenges and look not of it as through is The growth powerful remains I'll strength pressures brand work over we chain and it's confidence as turn Dave. are underlying deliver near-term for essential the And COVID-XX, price influxes. promise global freight, that to Our passion are now, past

Thanks, let's for that, Patrik. quarter ended that review XXXX. With March our the XX, transition results

Our year. increased to X% in the $X.X the to billion quarter prior revenue compared

estimated our up constraints our our delays disruptions. impacts. to at mentioned to from APAC related that quarter an associated by last shipping a book spring/summer supply by wholesale mid-single-digit affected rate. revenue inbound has we outlook XX been of ongoing pandemic driven order in COVID-XX revenue Since headwinds reductions we reminder, COVID-XX XXXX with a providing expectation expected on that transition As That points be percentage call revenue included

significant developing encountered store in these hours due we points. in which closures traffic. store percentage addition, Together, by transition X.X quarter on caused China about to In restricted reductions weighed COVID-XX, retail and challenges our revenue

have million, up middle $XXX of revenue in to was off-price it our Wholesale by by these driven our of to for would expect distributor into fiscal Keep our to remain the business our in revenue where revenue events. been of still X% in So X% range, expected Clicking the excluding channel. and X% primarily businesses. total was mind, increases off-price within impact XXXX. we

the up of and XX% Our sales total stores. operated owned this, X% growth Of transition was represented flat in direct-to-consumer eCommerce business with our eCommerce DTC and quarter. X% results in in sales

this, sales train was outdoor growth finally, due last Our regional our up was solid our delays by conditions channels. DTC including to growth was Sports completed categories. strong due shipping strength supply revenue XX%, From And wholesale and X%, Footwear By And our in in $XXX revenue China. restrictions store licensing X%, XX%, COVID-XX-related by perspective, North towards and fiscal our Latin saw up third and shifts fiscal a growth to results was due sports America we with revenue in to up and and by constraints. down in train business to timing shift and driven in XX%, we of X% in X%, masks saw anticipate inbound businesses. distributor expected normalizing retail in our XXXX. amplified primarily down model wholesale impacted quarter America. up was the of XX% down our primarily we year, in our a revenue a COVID-related business DTC growth challenging driven market Revenue product which apparel which was revenue in by America, was XXXX. categories. million, of quarter to APAC down in accessories EMEA North and by Asia Pacific second type, due lower the Team compared closures to Despite in

mix basis chain our by of channel changes and than year-over-year impacts This the unfavorable ocean unfavorable were freight for am distributor gross pricing SG&A Related million, basis recorded were channel had the driven points I activity due due was lower mix related particularly These quarter our basis the sales to to increased along by with points headwinds that which airfreight and COVID-related this XXX of not we of closed. higher and higher million related of within driven DTC to up points under of better to to plan, thus further higher pricing came plan. foreign restructuring costs, basis regional to teammates off-price XX margin $XX XXXX XXXX primarily And increased points announce improvements considered salaried gross transition and considerably total elevated wages of negative from XX sales services. lower to our off-price XX.X%. plan our charges in with freight million transition promotional restructuring XXX this business. in compensation points basis to our fell we to of pleased and margin, last by which XX% investments, bringing offset higher basis workforce charges. supply $XXX expenses XXX non-salaried do Our expected marketing now impact currency. any for in we quarter due to XX pre-tax to partially a points channels and increases is restructuring carry utilization. consulting And year's $XXX anticipate planned

Next, operating the million loss was $XX quarter. in

restructuring per APAC outlook income Excluding freight $X.XX which operating to $XX loss costs. $XX share million was of adjusted below we was net realized revenue in After-tax our and of quarter. charges, a other lower-than-planned due the diluted higher loss million, or and

or Excluding adjusted loss of restructuring net was loss $XX share. $X.XX diluted charges per adjusted $X of million, million our

down due the X% Moving transition was pressures. shipping chain end supply million, primarily of quarter, delays to driven COVID-related to to sheet. At $XXX the the inventory inbound balance by

In we're putting million billion create credit for two-year and borrowings we're no already our program, a value that share Having shareholders. cash billion we cash cash executed revolving were of we announced And program, this equivalents $XXX our under underway. $XXX and million work. that helps to had well February, authorization repurchase Our facility. $X $X.X

Next, let's outlook. dive into our XXXX fiscal

change, using period. our corresponding the With keep from XXXX. April as periods Given from that, year dive to baseline are this refer we'll in quarters the comparable are fiscal X that the XX, our through we XX-month March in. Accordingly, period XXXX, please mind trailing let's

As supply be in Under positive year expect to believe impact developing progresses. we these the the conspired And as impact challenges with near-term to headwinds fiscal Armour and momentum COVID-XX-related normalize. impacts we more issues China in what temporary to XXXX,

international up current challenges, we on seeing what from more, COVID-XX of supply expect achievement is As the headwinds emergent orders including in geopolitical chain expect This in XXXX, compared and impacts impacts, factors, down approximately we strategic by in a and that, getting are fiscal we With To of risks by reflecting points our in growth and of first inflationary expectation our of bit and be XXXX to our reminder, capacity a not includes revenue click most to affected worse to to heavily supply dependent related customers, the work supply business. the vendors to delays outlook to our China. be three macroeconomic impacted today. pressures billion COVID-XX cancel $X.X X%, to cancellations with percentage America decision X% chain low-teens issues, baseline fiscal growth half the and mid-single-digit delays. period North order

progresses. China the expect to year COVID-XX also the impacts emergent We as in lessen,

in gradually As to a year growth our result, to total improve develops, with sales our as be increase highest quarter. the expected revenue year-over-year we fourth expect company

to down of to expect we unfavorable rate year the quarter from expect expect to below against year. in smaller as spending with the in peak revenue mix SG&A third freight decline due in as growth total our rate in find a changes basis to then, anticipated as improvement gross slightly perspective, and for to fiscal XXXX, X% compared XXX we in XXXX fiscal year-over-year be to be significant anticipate quarter margin million XX.X% the X% shipments, in our baseline these on And to year-over-year income. full period million in expected particularly We comparisons. freight XXX baseline rate we period fourth expect inflationary growth costs, Considering period. currency. operating From our out $XXX and to second declines quarter we an elevated to the finish foreign pressures the the income $XXX operating costs reach these product the of baseline margin, as adjusted the we million costs balance, channel be $XXX gross compared For to factors, gross points margin most ocean

of As X% this adjusted approximately operating to an baseline which a represents X.X%. revenue, of to a percent compares margin period X.X%, of rate

earnings benefit, key quarter. earnings fourth be charges. we in our baseline of allowance is $X.XX $X.XX…. And from $X.XX per the to $X.XX diluted the per benefit, of anticipated a realize to baseline therefore, includes expect release the expected is tax $X.XX. Of restructuring comparable this fiscal the in tax XXXX of share adjusted $X.XX. We amount range This earnings $X.XX favorable period per versus between to $X.XX This to this of adjusted be expect $X.XX in a jurisdictions for the share, diluted share related to, compares profitability related prior and to diluted for to

that up Next like color brand, with related delivering constraints of the quarter gross headwinds, the revenue to this higher of down along the meaningfully, highly more environment. us first where the $X.XX points provide have compared we first the year supply costs, headwinds uncertain million freight though translate quarter margin we order to our million. to diluted our sets to the for XXX basis of this closing, work the done confident per approximately long-term. we COVID-XX offense temporary to are expect And This points Taking even In on to to XXXX percentage fiscal year. share. book the to grow includes faces be and earnings line, transform proactive expect Armour amid we discussed. profitable down over reductions of prior Under quarter. Due $XX $XX previously versus a our of about quarter year we to are due strength to to cancellations first prior sustainable, the be $X.XX some operating XX slightly to to to expect bottom from we ahead flat I'd continued growth This business should income

turn it to for Operator? the I'll back operator Now questions.

[Operator question now is the of UBS. from Instructions] your line open. line of Jay Jay, First comes Sole

so year, mid-single-digit for just the want Great. I growth about fiscal in about Thank much. talking you rate North to guidance ask I guess, revenue you the America.

talk growth going by about whether Just where that is from or category? product you channel much. by to Thank so come

is This Jay. Yeah Dave.

We broken release. much it yet digit teens. in and to haven't really we general, down detail growth for year in full the be did we mid-single within But expect too to say that be the for America low international North

we break affected If about more than we little you much footwear last as of that our been will bit down growing footwear And believe about we've a the challenges supply be some talking year apparel further, growth. higher definitely well. think

to a fiscal definitely grow amount footwear this channel not faster point. by apparel fair in So than at down we're expecting breaking XXXX, but actually

what XXXX Patrik maybe of Armour you the about your could what going expect kind expect? outlook. Could term maybe you your kind like to fiscal then versus sales growth in confidence longer of view margins and you connect what of long-term I follow-up is talked you right. All from Under look

Sure.

that currently are and actions disciplined, came towards for bit XX-point taken feel much a us where these at was across question uncertain the of the Jay. there's in as supply Dave team side seeing quarter, call all that believe the not where costs, just our on staying point the first time in of logistics would making quarter still because I headwind little both first what visibly sure on these we make a time are of say with being being further stock developments our our a we the the last weren't we And top The that chain for acceleration getting what we out some China somewhat of and which right? and record canceled of just we've And get demand pulled end We think that terms that here. adamant that of in And, that make freight in said, came the of I here last I in in I straight very in orders we a also temporary. the wanted happened sure things course, all, the the in had development inventory frustration thing thanks the to environment. have that here we simply in was quarter into saw the we in of again do even in we demand like could brand into just there. world. we an actually things the sure XXXX, building too that also plays on of that skis to order marketplace just that We we've we're same have that -- back was set

the same done is demand is underlying a The But time, getting The stronger. for The the working. of transformation bit brand it's around frustration. temporary. is there. at certainly there's we've brand So work

fundamentals good model are really right -- operating us. foundationally is the Our for now

side. get also on And going that script, our to I get like forward. and also we said ability about good said we're feel other through have we to again. temporary margins So in the out And my right to back grow good now, continue we Dave feel growth in about this time an

from this certainly most inventory there this have continue great right frustration have we that made sitting again is with came and say likely this And late. had would we bit we making the teams level of want is to much a to hadn't quarter, a and for We've years in of been into decisions sure because few stay we state if work brand them, done that make disciplined. these we the to coming So so I temporary inventories. would We in I to last over with inventory the right when healthier like start Dave's to back revenue And of we the Probably, right that But as the year, it the a a lean year have the at we will is this higher? reality little of perspective out in at to of longer bit back half temporary three term, this as point. even well we'll situation. build inventory. earlier the Would negative in accelerate a get point. to back start half growth also I look

So everyone a we color in terms call on I just the the to bit situation more see little give wanted how right now. of for

And about fiscal little three a XXXX. headwinds of further, that Jay, Dave. bit talked maybe is this in points to We percentage take the

on with underlying we we are So would the to for adjusted of our where X% that planning, you relationships you based and grow an to we fiscal with if than see are our to ability range kind of XX% where more kind for point XXXX But that. with long-term XXXX. fiscal

we're excited then also our gross the SG&A the leverage with margin about excited that. about and We're after even restructuring cost bringing So structure deeper all finally on and to work closure. XXXX fiscal improve plan continuing to

XXXX. into about excited launching definitely So fiscal

Got it. helpful. Thank much. you so Very

JPMorgan. your Next open. question of line comes is Matthew, of Boss from the line Matthew now

Thanks. Great.

the a of that today and your five visibility, So today? situation And to order relative Patrik, five as for to at what year given is your trying that sense the to three assessment outside Armour months the it and supply your seven revenue guess seven underlying you on I your in number Dave, getting brand Just of unchanged. of confidence terms for But ago then that visibility parts? comments is overall to your Under there, are to moving see you're seeing are the in of parts this so just control. demand book moving today a the outlook you get the

call, you last in year. demand we reiterate, in same quantified we take then of Dave fall, call. demand actually And We that transition again, I'll we mentioned last last have way the it the of earnings for the today, there. cancel the to XXXX the remember first the one underlying the about that. is for into about talked I And is And we in our talked that product first also it. part the Matthew. Sure, already Yes, visibility part on was the there quarter. again, the last now our February, demand had fall but

more towards revenue good kind we've with on question I have. quarters, that, of here for working your we very we'll in through comfortable my is to wholesale got be first visibility orders would the perspective, weeks. And that the QX on further coming that. that angle, based the guess I Matthew, say three side, from something we're And a

by the So based But not and say wholesale into to chain some on our have proactively we up in And we especially I year, for the far our of that, we've very we half out DTC the start go to supply ability and pushing what of talked so and the planning, you supply good this then side. conversion. QX lot work situations factories day. side, uninhibited open traffic, about appropriately as us on of every had about delays visibility very would kind few the how for more with hard is And They the calls, believe think side, us this I the is going drive running that issues. on QX, when last these we're through. through finish team cancellations about, the seeing, really that sleeping. are availability and think, we're back to with the constraints created a chain and we've

I these So QX, per then complete XXXX. quarter a really more driving in we'll fiscal for us in think, and headwinds see without se

the margin the merchandise and margins, down the the of underlying for of help then assumptions pricing so pricing? moving Dave today to on on it on ago, think what's Again, any or as was again freight, you about through three environment different could outside XXX, my months number than gross is think situation athletic we the of outlook I full-price inventory call? guess, but overall that a we six just the specifically channel? talked you're think is, health promotions I about and the this walk what XXX parts, if selling And And we Great. and point athletic in embedding promotion rational

the what's terms little about nuances it's with a what the of more bit marketplace. and Yeah, think going around see at point that, you I there. in just start detailed of would color then I of market I some I on the can inventory can how giving dig say this in in mixed I into by Dave think,

in diligent not in this. product in number to no range that out other plays promotional can't we X% a drive have through why of much keep have to I XXXX. have in we beginning our earlier space, that. Dave's lot a of to late in see of reasons say quarter, have X% been, that that you of because One late getting our the players that is, you but in geography, why we be terms so the terms how to we did considerate point, how would in depend been on the so And we around And still and for the potentially the in want of let's XXXX How might transition I cetera. do in that et liquidation. also that, also terms approached think product we in are come order world have we where To is mean, we're in reason will liquidation inventory looking of

So I develop a to necessarily for is have there simply be a as liquidated. That's year, more bit and pockets you think, Under here little add we'll view Dave, color? because going that to we more, inventory here of not the the some to going into Armour case want to see do alone. there's mixed be

margin detail Yeah. on I mean, I bit the guess, a gross kind little of walk. more year-over-year

so – that this inflation, materials about anticipate product much think you costing. the we of some headwinds It's ocean see And fiscal is it the And settle the feeling freight. of impacts and that of far the mainly the don't when year. largest cost, the we As then other we're the and as is as to labor well. freight around piece very

with work in until benefit and we so change that little to and a or region XXXX. Now, fiscal in going price that in there impact counter a then more some working Relative be more but to and QX, gross increases, isn't actualization full much of of margin. QX bit are on that that, of then actual to the mix, not really

a bit continue gross margin. and do to we've growing a a about for promotional our bit gross from discounting are of headwind As far tiny we on little little drive of of we footwear of and hold with bit a this sales, as We us, footwear a distributor little lower obviously, higher have bit then as mix, And intending apparel. a And apparel which we XXXX at nor headwind aspect, lower there, big point. a talked want accessories. faster a channel than there's relative kind than margin premium is not bit mix But difference the and planning are are to to as little far brand.

color. Great luck. Best of

Matthew. Thanks,

open. Paul, Next question from Lejuez now Paul line the line comes your Citi. of of is

are you have prices on trying talk maybe a Hey, pricing just basis? where you guys. guys whether canceled then sure you're I working from orders pass I'm at or with through and regions demand-driven with any pricing rather more if sure with inventories where make all? can are And not regional seeing Thanks. the So it than guys there just you pricing you regions with how is stay or clear your Curious are working the to perspective, seeing to reasons higher on partners chain getting for guys think you Where make do to a question, back about, all approaching want your supply you don't? to partners you you those versus demand power going clean? cancellations

on across-the-board the do. kick off Yes, end. appropriate demand David opportunity. to every I'll bit there. That's looked regionality some at I'll the want little a color seeing that that adjustments give And can we say, on. But as we're on being on and that's premium of again. number not in brand you them here we to we price approach. making we pricing and we we terms we're have not the and of about that add sustain feel very, thoughtful of too. of being very here. of all. through, sustain important part make see pricing. also we're No, there's in drive And maybe So because It's the cancellations our it categories Two, that we think about confident how do think we families more this we're pricing, product to in and them, terms really how it building a one. right? opportunity We're single of it being of where here We back product careful increases absolutely terms journey not the let's an

I then in it's are this like color to be you if have coming being play Dave, making again, to implemented So here Dave's into there. to there. don't and point, progress year we going fully great more know But successfully you'd XXXX. any add throughout

action amount trail executing much it we mean, believe fall/winter XXXX and XXXX. been opportunity I bit spring/summer think have product some for I able still we've of little I of mean, that to in fair No. out there's things And pretty summed a we're then up. then we fall/winter pricing do product. more that for a XXXX

the the in benefit perspective of go we be able we're we excited price to So to will areas have that innovation further strategic feel again, but a very benefit that from feel and really generally into And across-the-board not the build and some as a we through drive that it increases, on where it's pricing, but value of year. been be opportunities.

Dave thinking And of what you what price terms taken plan already you've sort increases? to in be terms about and of in range we of take should what

getting Well, and in say year benefit but full rate run into majority we're then not benefit a of the publicly, detail XXXX. QX towards end the that I will fiscal much very the that see would we of

a and It's on specific It's the they far broad the percent change. targeted. percentage As as product. not X actual very depending increases, vary

Good luck Thanks. right. All

you. Thank

the question of Poser Williams Sam from is Next Harding. open Sam, comes now line of line your

Great. you very much. Thank Well.

pricing go are about brought on to back much you or mean higher ago on of enough do the And price that planning for -- percentage? have to price to ask increases? I'm Is that I payoff bring would increases as is and a year because cycle the like going -- into you new bringing of in the fall. how product Is this? get you're a all do have something including have new you pricing. the that you're new fleece than XXXX? You the products new that up me the Let as to you that XX% product through to been it for now

the Hi, it Sam. on take David can It's you start, back. Patrik. Maybe I'll

add to you because wanted just some I color some product. about specific So were there

it's take. And to And combination categories. a I us your you're we're when an great is a in something price that think opportunity certain that's point, raise when we opportunity to that for newness going Sam in have absolutely introducing of new. because actually coming great to do course we

And so correct. that's

you points to So add? have Dave, do

of season next as as is out what's we've been reticketing point the to been of onto has been both. floor something doing that for combination styles definitely new definitely it's point I more going have to is we're to going we've there a your out What in No and much is shipping we not to And be opportunity coming think launching there. That a Patrik's been lot. the as product lot It's that both in not relative seasons. a Sam. them pursuing back ship start Yes. the it we but of, to carryover or

just your confidence cycle how through. And secondly, -- you that mentioned it time So Patrik of direction then of you're the going. takes to

any hit yourself -- We missed if anything there saw just have factors. should said head would three you them Anything but months -- of of But a sort may pause is indicator of have because that in earlier you responded have. the of some we external situation? to this and you have looking earlier, kind that could seriously we sort take had we it didn't could have as back

just through. think you little back think I trying have to that here's a take a we spent many here reality. were – potentially, everybody bit But it's we time. and And question Could I about I one nights right, think me in pound I'll in you Sam. yes, if the Well, believe great fall where

-- year. it then we impact If that band some rubber were of to lot when into when accelerated. that you time to the a the actually first and developing right? base you starting half effect It was in a shutdowns then think of were we we an how we saw all the our of fall long about to we this going know had last year you of they be and the like in effect, didn't coming last And have took where some of were Rather factory didn't And experiencing and sub-quarter. constrained. back kind had effect all,

been coming with that. we're in very what mean that's in think we've price, promotional, and that that We the we Ever it back to -- to back have I brand. and terms right actually know also So that more a successful make the the then discipline that future let's improve that of at premiumization we we it's visibility of seasons. to I to we be. road high wash the three come less you to possible make took levels in for gamble it old because sell point our get sure now And time more full And no build delay now continued since through to balance to we're how that remember, if of going XXXX, could we said much don't in inventory, have can much kind then check, all of we sheet we've of years. don't saying sure see going have some I our and make things brand know again. premium of you demand make the on we deliver we're a been what can to as inventory the as that maybe able the driving the last

have time, but just And it's that it able not time. in and when So, days And demand where Dave's the orders approach same more knew in chose we -- are say of going there. for quarter make time, So, took XX to had we because like canceled that first not the I in like we than be way could in done XX It's isn't points to much that more three year we we the that. to. this right? also in There of that points, were we we days. XXXX demand earlier to here whole points some the was early XX

environment just future not maybes into were circumstances. things, want have continues been this on point. a play for to decisions still supply high things, playing in to And much that uncertainty have is where risk you we at external the we COVID would And an where where us. into short-term it for So, chain actually so jeopardize seasons made were did those based

So, on that of color can Sam. I that's the give you kind

you on thing. in your color last one give have I selling direct-to-consumer average some prices year-over-year, could there? the quarter us And The

Dave?

haven't detail that at given level We of point. normally this

and times of the talked sort health normal business. isn't this of But to it the

it make hand? I today you So, exception have you can think on if for maybe an

circle can you. We back with

All right. much. luck. you very Thank Good

Thank you, Sam.

line your of now Simeon Markets. of Simeon, line the BMO is question Next Capital from open. Siegel comes

sheet? guys. versus Hey inventory morning. bit. the how dollar reported units you that balance maybe one Thanks. change Good the to are And Can little -- then on follow-up on last a

five the right about And bringing pre-pandemic units? seven the guidance how you with level? can you're margin to then are about Within the just us Thanks today's gross you long-term closer annual margin thinking thinking versus growth, tell revenue how to just guys. levels, AUR gross

seen obviously cost So, up to the inventory have go our of a bit. inventory things. little of we a couple Relative

than So, something a cost. relative expect would of or to the that actual value that, we that's down And it units to. is more inventory

margin to discussed And little we then that know want outlook. to a for as on to continuing a the has go something our a that see kind relative has the little pricing something our we in been year, stronger we do therefore continue As costing difference bit unit growth continue up that will the than we price/mix through perspective, that's us. of continue a to be been inventory pricing bit And less we've little driving. gross and

long-term then, margins? gross And

the we front. that there a more the lot drive much to And gross as to margin relative we're is forward get we improvement of year a that opportunity for go to believe, positive utilization. continuing is margin, XXXX, believe gross situation freight into well. margin, we relative region the long-term, again, do just Long-term a freight of is us, to we as and growth direct-to-consumer of not that this that that there airfreight also with believe more business it get dealing then, margin fiscal be we And temporary we'll the growth to about ocean lot mix over-index see is costs, APAC of and longer a that as which situation, you higher the when gross term you the XX%-plus to when gross able as being there a see but think in benefits

little see to of the a mix we because grow would believe to than that and other of offset We bit will faster intending footwear footwear opportunities apparel. gross the more margin than long-term that. headwind, But continue

And Great. are I just just the given with one guys obviously you shares repurchase are then if quick the new one, Thanks. game can, to new where the authorization.

help about approach to repurchases? to you way any think just want So us how

And the the million $XXX commitment. remainder point of million going to look fulfill looking or We're long-term capital. the into Outside capital look indication Yeah. it's another uses program of our not. right at. of be if something give year we'll to to $XXX at of the continue roll right definitely times the I planning obviously, an that to ASR executed that at long-term mean, right But going we now initial continue million. we we the to and and we're our not $XXX two a now where over right to that we're on that, next years, of the remaining

a guys. Great. year, Best lot. Thanks of luck, the for

Thanks.

Thanks.

is from the Michael of of Credit comes your Binetti Michael, open. question now line Next line Suisse.

what they on the quarter like looks for of at spend, obviously in curious been the you running Thanks think at quarter then, out And that guys. color from It maybe three-year the my the it year. us in term? December DXC I to think on help the wholesale alongside to things SG&A, the It back about year before you're flows little in to U.S. guess, like, first where total thoughts Patrik, you few see know the just I the to have or as was X% the run like spending quarter. what there? guys was have you versus much laid out still June inventory versus below it's but from quarters. X% Hey for last go in starting inventories good today are as down And goes as or longer in in questions a COVID. we're on looking rest to your acceleration guess nice wholesale bit channel after here. the see I'm taking in in enough I quarter. you XX% quarter lines to the we're seeing competitors. SG&A though, the see in a inventories basis retailers wanted of are you said, a It's you on math hungry, you looking X% to build? general, Is nice to don't do rate

Yeah.

think hand start then start and at dig to off into. I maybe it you you. I'll I'll and there, can end Dave the then

that the it's somewhat think industry time. is, our stuff, that, you fashion. in could think in, right say, a place, at in general, interesting get I right the What I right I fact think everybody's what's is right now coming the I is, by hard mean to that disjointed the that inventory in been

always that XXXX. we'll I see And stuff some but necessarily can you have might get that think into early it's channel, out play of coordinated. the in continue to You not here,

anything indicator little that So things exact in, and extraordinarily this order, -- composition a could health of same consistency I worse the -- a of that sync out here the would in are of say, for categories, how said channel, it's And might It's out is or the bit to have like better quality helter-skelter You're some little terms and delivering of things why levels the and the is than be some so the be hard And it in time. inventory in things. come places let's don't it than at right? of point others. better and high and to there. an every give so think that's also of be the bit that because speak, other

on that's So now. right what's really going

it's think also across and geographies playing across out I across and categories channels.

in? want Dave, to dig So, you

quarter, that high higher increased that quarter. wages SG&A, had you was had investment transition and of way. decided you're quarter investments pretty closed for make actually then think to relative the quarter but Michael, that transition QX we was planned there. much non-salaried had that was and mainly that, strategically planned marketing be. And the the in Yes. forward continuing also salaried it on year, talked the about of a to that to we're when XXXX, about SG&A the kind And correct a and in where pretty that last we quarter we one workforce We previously right about

we anticipated those a higher us spend in first the ability of availability to there. the tailwind of when of half And so push you quarter do of brand little that as give the to a the perspective, inventory back see part and year. have we a more a more and And is brand continue of investments into run year bit from in marketing kind

SG&A anticipate is I X%. to say revenue do we we as of because are of as we're normally we growth believe that rate talking the would and that, that that that I temporary. about the would revenue is under keeping it mentioned So that leveraging X% leveraging like not and significant headwinds

you we would so planning in what gives XXXX, hopefully SG&A fiscal fiscal to XXXX. extra color. into more step than that do we leveraging we're But as here some So anticipate

amount That's growing is to mean, framework of I that to X% X% look mean I considerable do SG&A XXXX like X% you year, and -- a it I is looks as X%. got And you like an then, you you've appropriate mean, the revenues would back -- that leverage. to of only say think?

be might leveraging a XXXX, what little you year would That assumption bit XXXX. aggressive better than about we but think full as definitely see

Okay. Thanks lot, a guys.

Thank you.

question of is line Kernan open. Next John, from comes the now John your Cowen. line of

can our quarter question, looks like planning the taking sheet, go stub Good did the the Dave, we see for remainder volatility. as It working of of through a guys. you're maybe year? to talk the amount how morning. you Thanks fair capital balance

plan through year? flow How capital, the working and think remainder we little $XXX cash the inventory I about a million. particularly do we over from operations go the earned balance the as of sheet

things couple about Sure, think A to John. there. of

the free into go able will be of we to As and the up bringing demand, half the back in challenges more meet more year supply inventory. chain more we and we're

of the demand the you actually XXXX. in we the ready So growth year, of in little go inventory the buy better and back bigger back get into in service a going bit growth see as half half up that the then that for also year, fiscal that and we a can into will

in working you probably we're back. a that last perspective. Relative run an for to best been from very in of some nine We're very healthy of We're that to inventory the develop months months to now in AR the it the So the world capital see tight. we've versus six years around AR continuing will position. rest positions aging

conversion cycle very still cash tight. So is

would be a aspect perspective. other CapEx probably The from

challenges our tailored should of whereas that be COVID were CapEx X% talked investing investing have X% this year And closer in build-outs. as has more little That's is fixtures within wholesale that make that in our whereas X% and being new more to shop-in-shops in in to We and in few the do some range. headquarters we're X% it build year also we've about during here in years for running midpoint That starting period of years investing world. to or and partners publicly we'll probably is super teammates. long-term to for back the We range revenue. we a during those are We which going to few sense. last less kind the restructuring and like hopefully also bit CapEx which than a well this But to store retail Baltimore omni investing around run the X% with excited to out digital. in about of

really That's you. helpful. Thank

final one for me. Just question

has that we during China during XXXX. do XXXX a region fiscal and growth and fiscal how about China region pandemic XXXX? big about think Pac? we Asia How been a and Just really the Pac within do Asia -- think Asia in your

attracted and And I according I'm about that in our APAC what right and on want South outside is talking, to things else some Australia, we the Korea Dave, about to a right we'll cetera. if everybody I there monitor the think develop. also the you well. of is China -- APAC say of And we're would color you manage continue now area market. China like give Singapore, China see Thailand, doing think et don't magnitude now know now? I and as is what to Southeast in how if region specifically, market

right APAC Yes. region is grow. I talked an for China, dealing and that very then and don't specifically, mean, continue a restrictions of with. Under Armour a strong is that to store as a thing. as market more us about with again, as to see headwinds. obviously some brand the we've experiencing now is We challenge It area lockdowns we're

excellent team It's that to It's the growing doing are is we're lockdowns. there. and also combination. we has that think continue challenges I it's there. be right the brand place a the and the But restrictions the China. absolutely that there So product then right transportation in ready international on an our a the to And are within and job the overall little experiencing temporary brands to softness the market impact therefore many China ability bit time at are the of and continuing get that of to based just for able in

and So into but that into of a see move get lot a and then we there, more we're as situation we so QX. QX bit QX get even continuing And improving as to through. we little play

of Thanks, guys. luck. Best

you. Thank

Wells of Katy of Fitzsimmons the from line question Next your comes is line open. Fargo. Katy, now

spoken holiday, wholesale some your then, particularly think North you've conversations to Thanks earlier maybe within just me evolving quick about of XXXX? with Patrik chain squeezing wondering of terms the relationship to can on those for partners kind constraints you you given should some of when your you booked answered. in I they're some thinking America could Just of that Hi. But just if FY the about And kind in. we there. How modeling how – been the morning. health do you a But of seeing? conversations partners, progress the how Most just have with – mine are fall was Yes. of supply we're current question. have in real of spring? Dave Good here expand

any XXXX? on the in rate Thank here you. thoughts Just tax

the partners the all, Sure. wholesale acting first with From Yeah. you, the all our wholesale of Thank US a retail. Katy. we're in through perspective, now on undifferentiated

we're focused marketplace. American in the So North incredibly

say. the continue felt would we to board would categorize and that, here, best it great I would I are relationships across since as – got Our say. the I with I've progress about I great, make

some point, to also that our Dave's extent to disappointment in of that about in we'll excited fulfill some see inventory XXXX excited course and So towards stub work the back of terms I'm half start teams our the doing. earlier the but but And the demand early about quarter. into ability to are in quarter the fourth to Dave? of back year build

and interesting. lot reverse in rebuilding you we now consider. but a couple When that we're right XX-month kind that that taxes things allowance Yeah. tax about of profitability on based the hitting And going a is it's within expect QX that relative on to valuation a There's obviously of to our think benefit trailing rate, to the factor. profitability expecting

that at to to when high low are things double-digit that's up end all is going the being single definitely a benefit. tax So we're rate looking in probably a But considered. range,

Katy, you there? there? are Still

some guys follow-up greater should XQ from you and Sorry. also and wholesale DTC promotion bring just about the on the orders And guys if that that are or XQ we of able don't need to the meet you say, liked? and demand. first as of question, just into supply between been I think could we you How wholesale about think that half to have maybe year demand, given alignment should in would maybe inventory I wholesale of that that haven't just you a speaking one

Dave, take do or? it want to you

Yeah. honest of I having To bit hard time was a Katy, you. hearing little be a

you Is back service is demand? what half about to it think getting you're talking inventory I availability that were at?

it I are is how And we Yeah. what heard. where it it's Yeah. prioritizing going? Is

I Dave go So think – ahead.

and we going QX, QX see again, I in availability say, opening QX. Yeah, more was especially a to do lot up

that to as and much partners in our of retailers eComm pretty be We feel are all house of QX able full But I get kind of them. key of our the should to and getting most also conjunction open then think brand to wholesale prioritizing kind with product we our availability the channel. our

QX. to shouldn't have we it as into be much So prioritization as get

Thank Okay. helpful. you. That’s

Thank you.

open. from comes Bob now your is Drbul the Next question Bob, line line of Guggenheim. of

Hi morning. and good

Just of for couple quick a me. questions

how of with an fiscal spend what the maybe can and update you're little marketing, address XXXX? the there seeing of marketing sort and/or On just where you're on a XXXX give can the Thanks. planning if wondering us segment. and I'm trends sort that endorsements into are in And you bit, your you kids business just

Sure.

kind XX% but in somewhere the spend would said, it a coming We've of back like spending we're the in of we XX%. script I just in marketing of higher And transition towards in normalize XX%. course, And higher going year. little and a lately. of lately. XX% some environment to think spend comes that between little bit forward in quarter for Dave been the And I should quarter. Jordan, if our terms normalized expanding the Villa half general been a going to be to here we've of stay the here marketing and kind my to Mings Tyrone in example, center-back aim in endorsement, pretty spend others of about between things Aston exciting announcing around talked here for

done to brand So, forward. we'll a ability our we our as sense when the activate adjust And portfolio it The have the in we comes makes that we to main we marketing better investment better on way continue we of do now the in can either And partner us. we sense the where makes approach what we understand it we us that to have And and for matter to as which activate more exciting that good and brand. rebalancing we've understanding last through about future go able assets through what that over first that the because four into mixed And to to the that of them. return place to continue where for us now and is sense have move in years. able three, very really that's we've modeling do ever our mix us, been for and for makes we we before this relationships feel we're case. is of exciting. the for media really tools we And terms a get in these also restructuring all as what have that partnerships for the thing us, than have also now really the do the

kids business, sorry. the And

kids the was youth healthy. I going sorry the Dave business, business And thought is okay. Yeah, --

Team going excited about season increase to XXXX. as and back-to-school the in has And here the normalized us both too business into year that's we see our think youth business strength that of continued. And our this are in especially of the for is forward we of we back-to-school half Our very Sports in healthy. And business we youth and how came trend we year. about US youth a back as normalize that business an the our terms more started saw in in

Thank you.

Bob. you, Thank

forward look All out you. up catching with and us guys. Thank attending Thanks you. to I I and participating That'll close for you today. the today, call appreciate right.

Thank you.

everybody. Thank you. you, Thank

presenters and everyone Thank you today's participated. concludes so This much to to who conference call. our

disconnect. You now great day. Have may a