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Savings Experiment: Snow RemovalThe sportswear maker posted EPS of $0.40 and revenues of $186.9 million; First Call estimates were $0.34 EPS on $190.95 million revenues. Under Armour now expects revenue between $590 million and $600 million for 2007, compared with an earlier expectation for between $580 million and $590 million and consensus is already $596 million.
Gross margin for the third quarter of 2007 remained steady at 50.6% compared to 50.6% in the prior year. Another set of issues here were a doubling of inventories to $151.8 million with a simultaneous marketing boost to 12 to 13 percent instead of a prior 10 to 12 percent of revenue forecast. Higher marketing costs may pay off, but the higher inventories are rarely a welcome wagon for investors in high growth apparel trend stocks.
We did get some preliminary 2008 targets today. Under Armour said 2008 revenue and income from operations will come in ahead of prior goals of reaching long-term growth of between 20 to 25 percent.
In early pre-market trading, shares actually popped up on the earnings per share number, but after the revenues and other key metrics were seen shares fell off. Shares were down 3% but are actually down less than 1% at $58.25. Its 52-week trading range is $41.37 to $73.40. With some 8.239 million shares listed as being the last short interest, it's a guess as to where this one really ends up trading.
Since Nike Inc. (NYSE: NKE) has announced a buyout of Umbro in Europe and since it delivered upside to earnings and guidance, it appears traders may have started looking back at the leader rather than at the up and coming star.
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