Under Armour (UA) 9 May 232023 Q4 Earnings call transcript

Good day, and thank you for standing by, and welcome to the Q4 '23 Earnings Conference Call. [Operator Instructions].

I would now like to turn the call over to Lance Allega, SVP of Investor Relations, Corporate Development. Please go ahead.

Thank you. to earnings Fourth conference welcome year and and XXXX fiscal call. morning, Under quarter Armour's full Good Today's event is being recorded for replay.

Joining Under Armour Kevin call will and Bergman. CFO, today's CEO, Chief, and and Plank; us Brand President Linnartz; Dave Executive on Chair Stephanie be

Our XX-Q. Today's morning's with May that measures other Under regularly to reconciliation found the X, to investors statements are current forward-looking XXXX. of provide with Armour's along quarterly of our references. risks statements discussion forecast a SEC, Form GAAP including on be the in of reports this report most helpful and subject which, about comparable uncertainties are Under with reconciled documents U.S. and The release filed certain underlying use elements measures, These include non-GAAP detailed Armour and perspective business a pertinent remarks management's believes trends. today measures annual includes also can reflect underarmour.com. these on press on view as information in XX-K the other of made our business Form our

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to and welcome call your Thanks, earnings first Armour. Under Stephanie, at

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underway continue then back of efforts the are -- it's the cetera. partners. approach. stores, think to our our we're X-step open of distribution of going we've So new up course, And But to X in a consumers. lot it's I got distribution But to market a we always to consistency And a work existing with about new way a focus. own is be doors course, too and front, new different to, going summarize to around to new on particularly to how be going channels wholesale step your question et of mall, in will really the X, and department Phase Phase answer we're going just

of you of percent Great. of to curious, have there a I'm are mix? frequency have new or specific benchmark the newness. ambitions any as for product for targets products then the increasing you And penetration KPI big Okay. newness and objectives QX, do

Yes.

great we question. are So

products and part pyramid of KPIs customers. and and of We continue our do work the growth course, percentage are trajectory, we'll better best together how the of customer understand their around are and consumers bucket, voice that metrics to best the putting relating of better to to to and talking that

here are started been that we we we're months, just together, putting forward. so getting scorecard and at but at that march pulling work we're together KPIs I've of X.X hard So it. as

your So Kevin, lens? anything from to add

that, she And something it's me. by of completely how at the gotten me experience, level executive Yes. a pretty bringing depth remarkable, company. having here. Stephanie. say before That's to what Stephanie days, just been world-class not you, that's honest a has Jim, and you, answer let Thank with and -- I of great be In XX shared

you I across if would think universal our be brand. the polled team, it

welcome, Stephanie. so And

what And hearing what for is so us. you're you -- is what you get, very exciting see

has as we're one know, with we is launch. on launched our new is Jim, XX in innovation always my at soft think something of full to side X-pocket new the great we of I pants has things the on of but have A is of that we the have right coming to about October one in new innovations product example example it Stephanie that Meridian Halloween SlipSpeed, way about and role you the also business. probably most like last think Armour And thing asked fresh of out Under in, force. great lean and line our on I a the year use it. mattered recently, SlipSpeed out a as me And steady of cadence product

on back came Valentine's then We Day.

of actually start out of think say, and to expecting I long consumer have by holidays product consumers' making around those the newness Under like coming of been course, But as enough from things the minds. that, famous consistent we for echoed legacy cadence to see. a We've as that, blow well. to Armour you'll one innovation is is products

also of as I from we've see these new in greatest some some coming hits, Under mentioned our comments in addition of innovation going previous reinventions to you're that teams, So had. my to Armour of

New forget court. doing last actually way to performance-wise, York this us at Curry, with sneaker Stephanie real just Embiid, from culture he's Marathon I From here won a who and is MVP Lokedi. brand year come things a Armour the that emphasizes all moving where Under the to Stephen through don't about the as Joel think footwear, critical City will what footwear Sharon well. what which like And won on culture with

pitches beyond being there's scenario. of fields and and shoes work credible but courts, from ourselves our situations, to especially the absolutely in X enough play, that into an emphasis of type so for and tunnel the And us walk getting

force Under sort the to standpoint, of we ability to the it consumers' got then Armour chalk of innovation blow a and to apparel doing an being minds think we're we've from great what there. comes apparel And great, leverage when

on and make opportunity. like ability things T-shirt as to people that great feel things stone UA no well mentioned, from is which So own, the with with like we've working we us we leaving what And Stephanie got few looking the as unturned with to as in own a that experts footwear we're sure relevant real well we're expect opportunities the as that a a to outside both also apparel and brand. colab or us matter at focus for

And Markets. Siegel BMO question comes our next from Capital from Simeon

person forward you to soon. in look meeting Stephanie, Welcome,

to the but your bit little for So you some gets across, of from nice you balance then thinking about coming focus the growth really about beyond. repetitive, year. different it's here talk improving more? And And well interesting dollars it'd you're growth elaborate and excitement as versus then profit growth a and 'XX apologies the been growth. Armour it's that turnaround has opportunity just what why of Can there on be 'XX hear past? Under always about gives the now, into how as this maybe is comfort for than you the and Recognizing to if into

coach -- performance. is products. much knew it's Sure, really been apparent of strong from it opportunity Dame. and I in have I of of here, my our months They me me but our it's the base to to course. more love about and like the Armour. Notre confidence coaches before athletic What Justin significantly directors, with grow our X.X gives that even athletes Under in Freeman so and lucky company some people absolutely performance the came I meet athletes believe to Jefferson first I've mean, we in

things So market. of triples Sportstyle, strength into from we that place as our addressable lean again coming we're like which total

details me went through different ways, distribution, in end ways, elements excited. distribution our a all company. is the doors improving partner a our wholesale that that from of but at in own running in really product, marketing to the and perspective, why So and better the our marketing different when gets website, the a which wholesale accounts, stores, growing doing about key I being existing improving -- are you're retail better always we're in product, of the the day strategy, our devil

company execution bit me, my in is efforts of of that list And efforts but and tackle. X explain prepared the a know of me of I what to we've I this laser-focused. heard projects can long, be accountability. mentioned is done results. list like the really new. it to let and pull Focus years, for lot But today, and what about there And the we here, trying focused isn't a so little leads you've When got projects I down recognize why some X things. can And off was more, long remarks, a next it's narrowed this we I was we've to

teams It's marketing execution. out. all about in day The that product is day business across teams, second about teams, thing the the out teams, silos in, the breaking making sure regions the we're down our running

of time lot for drive team the end all the the then a of and spending results to holding results. as I'm at executive business. and it's effort the day. we together So work team, accountable accountability, how about am a my on entire myself, business team And third, I

deliver, I time and very much and that's team myself now. to. We to the I'm recognize need holding action what accountable is the for

do at but it's we end we most part, it's top focus, that, laser-focused line, tactical strategy focused accountability, a and that driving and always and things is off on not but bottom execution have the driving So pull line day, the you of the are the as the profitable growth. equally glamorous on

side that too. the understanding in lot of a of time from an where deep business, spending diving comes profit understand and I'm So Under Armour to the

only that So really not is think off. of to the measuring and 'XX, it's about at course, but we'll driving the we where 'XX take start efforts fiscal growth, and will ourselves profitable in in year our beyond of end be how day,

following Dave. up or that you and great. That's maybe for for And on maybe just

Just pieces takes? the help for in those gross puts about Any guide year? of the thinking the embedded margin through think moving and composition way the to full

have but side, relative caught utilization not market. in we're of that side, lot some as but things carrier out better freight well. about it are parts there's mean that levels world North to excited freight that what's Absolutely, lot, the going less cost up ocean real we're a I now that inventory there be in Yes. also But bit air just There's a the rates on we're of the couple a the out the some heavy in is of we're of there. whether seeing just on in little normalized tailwinds other a America, on supply there, well. the being flip and spot more as fairly also a chain

that. And to to planned that able we're move want we through to be make sure

of of to bit as little little more within which our And will range of that excess more on impact for margin though gross that product, revenue. sales we're to X% we It so a even going channel, percentage includes means X% higher even also to it utilize off-price an bit keep that has outlets a a well.

on there's this get kind fiscal there fiscal 'XX much into I'm excited much, 'XX. So more benefits play. different our normalized costing come alluded 'XX. couple there which going and year of of to believe to different of and in stepping to be about, as on overall nice really certainly beyond fiscal are situations as of real going we that initiatives right We well. fiscal we a into But more that a now and what a the our And product structure, have little out bit, are doing do Stephanie some half back into things into inventory the lot are going that is believe we're

Jay from comes from UBS. question next our Sole And

margin you when have us can until have your can much to to objectives Dave, it? stay sell think how I that What profit A a inventory much confidence Armour the pack sort And going and terms fresh growth to and mean the sell of just do what couple And China you you fiscal the you plan you hold how you expecting you you're the China for it of Can sales? vision? just should financial you're then in same possible us And big maybe, and kind inventory, China, of about hold. in you, of Under is and vision sort be are? operating business of in holding give Is questions. your of it how tell at like what inventory? on to just high-level 'XX. pack mentioned some how progressed on the time for quarter, time, that talk

put flip and confident grow figure this but it I'll the out ahead. a Well, over your significantly I then that years to on there Dave. start, But growth, Sure. I'm quite yet, ready about to we absolutely am question can not I'll company

in of couple today, I only business great, when think that's but statistics is footwear a Just it's context, that about only $X.X XX%. billion our that

So That's relatively that's an area the growth. mentioned of exponential growth. I area women's business, another of small. exponential

questions coming the a our profit of The details we're the So of again, to including incorporate But on in we of weeks China, but terms would to thinking flip do prepared the medium- to prepared our cetera. which growth way call years and about Dave, it to I'll we growth margin. absolutely targets, today et in have long-term But ahead. work flesh gross number our ahead targets, call to to again, significant the our lot for the have us plan out not over over months you growth. that of

Yes.

So of fighting about and then fiscal we on proud COVID China, 'XX. -- through that. if I don't think be team you and navigated more the out impacts from of in again, early the couldn't I mean then the way how our back lockdowns

So APAC and QX quarter an for region. really China strong overall for as

there. benefit team little the coming QX get little from rebound a the year there out of prior comping bit of very So lockdown. did of bigger COVID a challenges extra and a the proud

for APAC well fiscal So that definitely driving. we growth but we're to of in level not 'XX, believe keep and we're rate for anticipating positioned healthy growth a us, very that

I to And term. so small. we opportunity going be still continue for an that's there that's are to long mean,

a relative And inventory with fiscal a a more opportunity right as out healthy. doors is product. relative for pursue about continue rate were spot to 'XX, our and isn't we us to very expand ended better inventory. to continue to expand growth still to fairly the of which finished high X turns that going yes, best of There's we're just now So and a at inventory, lot bad we even inventory options But there. different to

low 'XX out all. away specifically There's we million the kind not pack demand 'XX. as have in we to of of and of fiscal fiscal are we opposed that sitting we're $XXX worth inventory hold aged inventory in of at know at prices on holding that the And a in probably lot it and about half comment, really blowing for packing back

our that based outlet So that's able comfortable being made, with we a a fiscal it 'XX. capacity to utilize bigger we're decision stores in on and to

a time in little And to end the so to us, range good bit a of QX kind our this in probably we're be actually and fiscal inventory we bit. and we get a to really QX year, of QX, by for the in year-over-year XX% spot, across XX% And expecting inventory see being by QX of the then down market our year. higher fiscal the little normalizing

fiscal able to us So very that, for way clean again, in 'XX. pretty well up to run set should a be

Guggenheim. Bob And Drbul our from next question comes from

have team Officer, you, hiring terms Commercial Chief in follow-up you I Officer? you're needs that Best talk you any I few a question just the on of that the hiring and just the a Besides Stephanie, Chief priorities there. see had focused for besides really luck. can about for then of Kevin, Commercial welcome. the a still targets,

good you. Bob. Sure. morning, And Great to with be Absolutely.

or is the great and up office coming for commercial filled X to lined candidates got slate right we've So that the of consumer a me. looking X months. now #X have we're chief where job, officer, of pardon And hope the job in

a -- Another position is we out have Chief search Officer. Communications for that are

to or how we stakeholders. As be I've together both or to consumers mentioned, going to marketing our our to be part our tell critical a and and story athletes, communications other going you of is

that leadership Again, jobs X been then to figure digging looking the So team. currently I'm only for my those in I've on out deep X.X here are months. rest. I'm And

head in and work remarks, data and report particular us to reasons on the bringing because I'd mentioned brand talents analytics of have I direct the that this the one all reports to my outside in And nature. allows details question all get to me an such collaborations excited directly up out these is in in critical an area, prepared me marketing I'm one me meaning to into my example. I'm is on then this having digital of so of asked roll the in that just sleeves things additional and in the of figure and So sports absolutely what interim, with talent is supplementing and with to talent need, we're last we capabilities that make area point also it's you've marketing,

my in but me focus So for big it terms area getting for around is of needs it's a this very days sure. in early space, arms our of me, for very,

you you, warriors The I Great. are just for And I back. I that can X:X, if think, question bring feel and like these could. Kevin, if down just guys an wonder

now now both T-shirt extraordinary. X I We're and mean, well too. of have the cool right It's between -- a new actually a as as and Yes. them between making sneaker Stephen, into dropping that Stephen superpower we to wear of Joel some play. it's underneath uniform of watching this Rose

things And so pretty exciting, be for those the so I the Waters with happen, it we're both will the heroics think can't you. again, believe we're you but with waiting all fans, should and

And from our Brian from next comes question Nagel Oppenheimer.

welcome. Stephanie,

have operating question your learning And we're obviously, plan, the guidance. have The now I about is first X. we you PTH to the new

change Is repositioning, in process do response enhance core? is in Armour? sort more a to business, the the maybe last think you're is the say, and -- more of type change a type Or for. there as of to it we Under expect process need You continue of you new you hires investment question, talked there the this But there? much about of will, some looking about the if the to

I there system require need investment we element what time. X. so is pulling a process And There Well, it, is then to going be people, piece and a right? over is over that PTH both think and and investment about of with we're time, and both off process anything systems, always to will talent

against prepared our is redeploy us control in simplifying and that cost to expense do his going Dave do we're optimizing term, top remarks, as plan and it's focus. my in structure. to short back laser-focused to on resources and As links on our the And mentioned we allow particularly which what priorities,

they example. much the costs think with do use So line I'll But over a I our the real-life in things ahead keeping be. a where will of very to I do should lot investment. require going that mean we're years

to like work site speed our I We lot for take our pages, on have and progress, vision app. app. to more where things and product made a some of our have improve We've do real our spec the standpoint, a website it. we're website a kind a and site of the should much from of have take brand the the to bigger our it world. can of vision works be where but tactical bring ways I one most -- we premium And we more the can way going

for be like assets a digital investing in So focus things us. will our

systems that's right away. So about talent, to and mind investment comes it's about about it's But that -- it's but process. again, is again, examples, it more one about in there's the many

going not I leverage to can fiscal cost that able few proven maybe few areas, to fiscal really 'XX. tack there, be pouring much how reasons. PTH before. 'XX Brian, But And that a absolutely, for and pressuring work invest certain a need to nimbleness, so more going X mentioned. we've on structure for of And the done be a areas that's in that fiscal be And into more I Dave. to because to this to these to And a we're we've is lot from and would also outlook just leverage little bit than think nimble do relative we're We investments, areas. we that that spend with the initiatives. we actually be 'XX. the showed Stephanie of showing invest we primarily in see that where we're we with able And Stephanie or have do better you and we're mentioned of just

goes that that's So into the we've the that outlook provided. aspects of really one

helpful. big X a of that product. hearing, we're to just better follow-up, is component so a PTH new again, plant as very this regard a then product, inventories, And with the That's

So is the more still elevated new out you now being aggressively before in there this really the product thought is term introduced? clearing then with product inventory have to near

Yes, that Brian. I a in started mean degree, QX. we to

revenue of the about saw of because built for as especially at the gross margin took there some as first fiscal in well. us detriment QX. we gross You and for that some in those you overdrive has of our margin And think opportunities 'XX, half, it expectation on outlook

very high, I but look now, as rate the SKUs. not at therefore, inventory the healthy. fairly inventory even it actual inactive seems -- of you of reminder, our at There's day, the lean though of is end old growth our much composition it's a And when a or very base. off think So very right

we to normal X% to able ability with and range be very to our through So that X% sales, move fairly off-price to in that that. mix well feel of comfortable stay

place in into now. than that kind then the work and we're will do run inventory to higher be fiscal process the growth out through, we and confident to we'll and a are even have build. able able really better So with laid very and to of be we an again, get smarter with into also 'XX But tools we

next our Vasilescu Barbas. BNB from with And comes question Laurent

wanted XH-waived? we you but to for Should U.S. more the the is revenues, it to North first comments to Can then quarter -- out your bit And think know quarter? should on, year for you Dave, maybe challenged I we assume assume ask parse I down is mentioned it's as be down the point noting improvement should little revenues or going regarding XQ mid-singles, much overall quarter first about low- progresses. sequential be inflection more the the marketplace. early America for each a I how

from they in be 'XX fiscal a about order is America based that, North guess QX this we that on do of carrying by primarily most there. is by with go And things couple lot has quarter. we and the that to of towards pressured back fairly primarily to inventory a think book half levels North driven partners our wholesale the cautious of when America. to going I revenue wholesale within coming Yes, and year. of as that into a And our Yes. be were going

or So our its into and is we QX. We that, out work that's as more going QX start even to further a do then big so piece see to way that get that's anticipate at play. that by

challenged most see do region, most is for we and challenged America biggest North therefore, for to QX as going Armour. be that quarter the the global quarter the So Under

to do then to see be from we forward driving to excited and And able growth, there. being we're the keep turning QX point back

well buildup I some a which well, you're outperform going wholesale wholesale the of go to more of with products completely direct-to-consumer see different move something think that place as we see relative Sportstyle curation inventory, is fine the shine and and the can versus brand this little as that you'll also, very with. there, of great we we bit a control start with our that We around pressures breadth to display year more all forward. as through to and we're

is a is anticipating well. you also can meaningfully new of is mid-single-digit about rate for million new this international CapEx a XX% why bit grow more for just China to driven Or APAC little That's very international year. business. you store up then year? $XXX $XXX called million. think maybe as for quick reopening, you helpful, out David. a sequentially this for just slow? unpack year follow-up, HQ? I growth then the is international that Is your this to follow-up Obviously, spend And as by maybe And

Yes.

think the for team benefits year out Keep again, able in we COVID when also of drive think QX. 'XX. had rebound about China some fiscal APAC, issues but mind, to over-index comping in through of APAC, kind was I 'XX in lockdowns from the a excited what the QX fiscal bigger of about prior, the

of healthy et really into that APAC, in expect China, growth, to necessarily cetera. parts, South Southern Korea, but level wouldn't we all continue 'XX, but especially growth So definitely fiscal in

picture brands a are a lot of And of heavy that there. have. so brands lot through as For still There's us, inventory been there the though, there excess inventory more closing than of have a been lot some have do we look There's levels at of we pushing that doors. overall well. really

how like got a Under we've and to with what so careful Armour. little that And be bit looks impacts that

There prudently be that right. think that, when So planned. overdrive is outlook. about think able but to you a But hope we in we're obviously, 'XX this fiscal we larger can we increase in CapEx, planning in you are CapEx

is around of on the growth growth. store Some that operated world store an

Baltimore, and in which the our with of the Some a Stephanie the our and whether place But site there et in the show is be yes, the investing brand going is it energy build-out to that e-com whether new portion the program, and new speed, in magnificent that, to as further of Under of of headquarters, here is feel is just in it had field be headquarters a also be that teammate mentioned, Armour cetera. headquarter loyalty building. then, track

So piece of that is a it.

of headquarter X% CapEx including plan revenue, still that will build-out. the and X% manage However, even we within range to

we're back to to planning. our into front fiscal benefit. and 'XX PLM more great on POS, doing a live So driving We're even actually in IT continue so retail in really certainly end-to-end the the we're I investing so not as system, management, of great us job will prioritizing We're investing there. enable on think revenue-generating transportation holding as in they're working lot a of things that aspects

So a things lot that we're of exciting into there. jumping

Boss question this from is next our is our Again, Matthew this And Matthew And Boss. question last question. from JPMorgan. comes from our last

building America. of a North year 'XX you the fiscal return to So cited opportunity brand. Stephanie, growth to fiscal in then is as 'XX the And

overall So putting what brand change maybe do sustainable you you're confidence provides in what or the as that sized is American in opportunities, up North of growth questions. then structure health view here, really the today? How place? the you've in X material And from

brand of part, with is health the start the I'll first what So the today.

as way product we good performance we not we're where product have some And very very the we prepared as of needs very where our a pyramid healthier in space, to the Ps, use to think and and part the where his I need marketing get things. faced consistency, Armour some done of the have has in Under the And noted And talked execute Kevin an brand recently, also strong better well word of the great in are we we in consistently the very X there. we base the be is in execute the would SlipSpeed. best we distribution. did place And solid we strong And about places and compression the SlipSpeed, more win. are across there of remarks and pyramid. Heat business very, across I part strong purposely answers, that gear, product, cold in price, when example. with Kevin like challenges -- promotion gear, and some because really

So confidence was best basics, building place. my and of basics confidence core because can we strong product blocks 'XX. again, second needs growth I'd tremendous that from the that and And we the the 'XX grow performance of fiscal in for say the but part health in And the grow year all and can all part year is to then in have a of grow pyramid. we have the brand end question the I in get fiscal healthier perspective, your better about

performance. It's of decades leaning get on performance terms have a brand this around, I'd than the the into work other into dare strong in to or much side. get X.X base hard be performance Sportstyle We to Sportstyle brand that way be to a say, of athleisure credibility trying rather performance. I right,

as So to And then in in it very tremendous the low of systems in it the investments be go to additional we numbers the back side. a lot X relates talent, have Dave some I bullish place year in fiscal I'm building have just articulated blocks building putting footwear we XXXX blocks making Again, place confidence. the on growth. year of see future further. XXXX of I'd we're examples our exponential can going and where where women's the is relatively even really we to the as on get is

no showing further am questions. I And

Thank you, Great. everyone.

today's for you concludes conference This call. participating. Thank

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