Under Armour shares seesawed Tuesday after the sneaker maker reported better-than-expected fourth-quarter earnings and revenue, boosted by apparel sales and growth overseas.
The stock surged more than 5 percent in premarket trading before falling more than 3 percent and rebounding after market open. Shares were last up nearly 4 percent.
Wall Street was encouraged by Under Armour making progress on slashing excess inventory — getting rid of items that didn’t sell well in stores and online. But analysts and investors are still concerned about the retailer’s U.S. sales lagging rivals Nike and Adidas.
“We worry the burden of proof lies on management to inflect its North America, direct-to-consumer and footwear trends,” Nomura Instinet analyst Simeon Siegel said.
Under Armour during the fourth quarter earned 9 cents per share on an adjusted basis, topping expectations of 4 cents per share in an analyst survey by Refinitiv.
Sales rose 1.5 percent to $1.39 billion, ahead of expectations for $1.38 billion.
Under Armour said U.S. sales fell 6 percent during the fourth quarter to $965 million, while international sales climbed 28 percent on a currency neutral basis to $395 million and now account for 28 percent of total revenue.
It said apparel sales were up 2 percent, fueled by its training business. Footwear sales were down 4 percent, as Under Armour said it sold fewer shoes in discount stores during the holiday period. Accessories sales declined 2 percent.
The retailer didn’t make any changes to its outlook for 2019, which it originally laid out in December.
It’s still calling for sales to be “relatively flat” in North America this year but up 3 to 4 percent overall. Wall Street was largely disappointed when Under Armour announced these targets. Analysts said at the time they imply the focus this year will still be on investing and that more meaningful growth won’t come until 2020 or later.
Under Armour has been grappling with how to grow U.S. sales amid a landscape flush with competition from Adidas, Nike and Lululemon. Part of its efforts to turn things around have included cutting staff, finding ways to trim excess inventory piling up in warehouses and promising a bigger focus on new sneakers and women’s items.
Under Armour said inventory levels dropped 12 percent during the fourth quarter to $1 billion.
On a call with analysts Tuesday morning, CEO Kevin Plank said the company plans to stay true to its “performance” gear, despite “athleisure” wear gaining more momentum in the U.S. of late. “We get athleisure … but we believe Under Armour is born on the field,” Plank said. “It’s technical in its nature.”
Some of the retailer’s best-selling footwear brands include Project Rock, Curry 6 and its Hovr sneakers. Under Armour also recently announced it’s going to be spaceflight company Virgin Galactic’s “technical spacewear partner,” making custom spacesuits and shoes for astronauts.
Under Armour shares have climbed more than 50 percent from a year ago.