UNDER ARMOUR UPDATES GUIDANCE DUE TO SPORTS AUTHORITY BANKRUPTCY
Baltimore-based sports apparel brand Under Armour, Inc. is revising its previously issued outlook for the full year and second quarter of 2016 following recent developments related to the bankruptcy proceedings of The Sports Authority.
Given the recent decision of the Delaware Bankruptcy Court to approve the liquidation of The Sports Authority’s business, rather than a restructuring or sale of the ongoing business, Under Armour now expects to recognize an impairment charge of approximately $23 million related to The Sports Authority during the second quarter of 2016. In addition, due to the bankruptcy, Under Armour was only able to recognize $43 million of the originally planned $163 million in revenues with The Sports Authority for 2016.
As a result of this impairment, as well as the loss of further planned sales to The Sports Authority, the company now expects 2016 net revenues of approximately $4.925 billion and 2016 operating income of approximately $440 million to $445 million, which was lower than originally anticipated.
With regard to the second quarter of 2016, the company continues to expect revenue growth to be in the high 20s percent range, consistent with previously issued guidance. However, operating income is now expected to range from $17 million to $19 million.
“While The Sports Authority’s bankruptcy impacts our 2016 outlook, our brand’s momentum is stronger than ever as we continue to see growth and increased demand across all categories and geographies,” said Kevin Plank, chairman and CEO of Under Armour. “This one-time event will not impact our focus on making the best decisions for Under Armour through investments that protect and drive our growth.”
