Under Armour raises forecasts amid supply chain snafus; shares jump 16%

11:09 am Tuesday, November 02nd, 2021

By Praveen Paramasivam

(Reuters) -Under Armour Inc on Tuesday raised its full-year forecasts, alleviating investor concerns regarding holiday inventory shortages flagged by nearly all its peers and sending its shares up 16%.

Factories in Vietnam, where Under Armour sources about one-third of its products from, have begun reopening after months-long shutdowns that has caused severe distress to many apparel brands.

Bigger rival Nike Inc has cut its fiscal 2022 sales estimates, expecting delays during the holiday season, while Puma SE advised people to shop early for Christmas.

“Nearly all factories that Under Armour does business with, including those in Vietnam are open,” finance chief David Bergman said, noting port congestion and container availability at some Asian ports have improved.

Under Armour still had to cancel some spring/summer 2022 orders to ease pressure on the factories that will take until the year end to ramp up to full capacity, it said.

It also warned of a hit to its revenue in the first half of 2022 before the challenges, including congestion at U.S. ports, start to dissipate.

However, analysts have said Under Armour, which has deployed pricier air freight to bring in goods, is navigating supply-chain challenges well.

They also believe the athletic wear boom that is helping Under Armour, Nike and Adidas AG could last at least through next year.

Under Armour has also been spending more on marketing, pulling out of discounter stores and sharpening its focus on its own stores to elevate its brand image.

“UA remains one of the few that successfully raised its pricing power, rather than simply enjoyed higher prices on lower industry promotions,” brokerage BMO Capital Markets said.

The athletic wear maker said it expected 2021 adjusted per-share earnings to reach 74 cents, above Refinitiv IBES estimates of 55 cents, after it posted better-than-expected third-quarter results.

(Reporting by Praveen Paramasivam in Bengaluru; Editing by Shinjini Ganguli)