On November 9th, Beijing time, American sports brand UnderArmour announced its financial results for the second quarter of the 2024 fiscal year as of September 30th, 2023.
The report shows that the revenue for the second fiscal quarter remained unchanged from the same period last year, at $1.6 billion. The operating profit and net profit were $146 million and $110 million respectively, with year-on-year increases, with net profit increasing by over 20%.
Diluted earnings per share were $0.24, compared to $0.19 in the same period last year.
From a market perspective, Andrema has performed well in the Middle East and Africa regions, with sales increasing by 9% year-on-year. Sales in the Asia Pacific region where China is located have also increased, with a slight increase of 3%.
In fact, Asia Pacific, the Middle East, and Africa are the main reasons for Andemar to maintain its performance. And in North America, which accounts for 60% of its total sales, Andema is facing a crisis.
Since the second quarter of the previous fiscal year, revenue in North America has been declining. Among them, in this fiscal quarter, sales in the region decreased by 2% year-on-year, while in the previous fiscal quarter, this data has already decreased by 9% year-on-year.
The performance of Latin America is also not optimistic, with sales declining by nearly 8% year-on-year.
From a product perspective, Andema, which started producing and selling tight fitting clothing, has a revenue of over 60% from its sportswear products. This fiscal quarter, sales of clothing products rebounded, with a year-on-year increase of 3% to $1.1 billion. The revenue of accessories increased by 3% year-on-year to $114 million.
As for footwear products, Andema's revenue in this category decreased by 7% year-on-year, with sales of $351 million.
From a channel perspective, Andma's main reliance is still on wholesale, and the amount of this business decreased slightly by 1% to $940 million in this fiscal quarter.
Direct to Consumer (DTC) business saw a 3% growth in sales, with e-commerce and direct store sales under DTC mode showing improvement, with revenue increasing by 2% and 4% respectively.
In addition, the high inventory level of Andema has also attracted more attention. But compared to the first fiscal quarter, Andrema's inventory has dropped from 1.3 billion to 1.1 billion US dollars. However, compared to the same period of data, there is still a 6% increase, and inventory levels are still at a relatively high level.
In fact, the backlog of inventory is not just a thorny issue faced by Andermar's brand.
Adidas' financial report released on November 8th this year showed that the brand is releasing inventory pressure through conservative sales methods. In the third quarter of this year, its inventory decreased by 23% year-on-year.
Another industry giant, Nike, is also plagued by inventory backlog issues. Although Nike has digested some of its inventory through discounts and promotions, its data for the first quarter of this year showed a value of $8.7 billion, an increase of 2.4% compared to the previous quarter.
Discount promotion is not considered the best strategy to eliminate inventory, and brand value and profitability may be greatly affected. Taking Nike as an example, its gross profit margin in the previous fiscal quarter has decreased by 10 percentage points to 44.2%.
Regarding inventory issues, David Bergman, Chief Financial Officer of Andemar, has stated, "Our inventory is still in a healthy position and these inventories are not outdated. We will strategically store seasonal goods until next year for sale
In addition to disclosing the performance data for this fiscal quarter, Andrema also cautiously adjusted its 2024 fiscal year forecast, adjusting the "flat to slightly rising" revenue forecast to "expected decrease of 2-4%" in the performance report, and stated that operating profit and diluted earnings per share remained unchanged.