Under Armour on Tuesday reported revenue of $1.4 billion, an increase of 2%, for the fourth quarter, according to a company press release. Wholesale revenue was $737 million, up 1% from the year-ago period, and direct-to-consumer revenue was $577 million, flat from a year ago.
Net income for the athletics retailer was $4 million, compared to an $87.9 million loss in the year-ago quarter, while adjusted net income was $42 million, according to the release. Gross margin increased 160 basis points in the quarter to 45%, driven by lower promotional activity, and regional and channel mix, among other things.
The operating loss at Under Armour was $10 million, while adjusted operating income was $40 million. Executives also noted in a call with analysts that the company paid down $326 million in debt over the past year.
It was all good news from Under Armour in the fourth quarter, which beat earnings estimates for the quarter and also backed its 2019 guidance for a revenue increase of 3% to 4%.
On a call with analysts, executives touted new apparel launches in the year to come and the success of the HOVR line as bright spots, and the retailer plans to "double down on performance," according to CEO Kevin Plank, who noted that the performance positioning was a differentiator for the brand, despite the larger movement toward athleisure.
He also admitted that the brand's focus on performance "may be perceived as a weakness," but is considered a strength by the company's executives. "That's what gives us our reason for being … that premium performance positioning," he said.
Under Armour has struggled in recent years to stand out in a fiercely competitive space, especially when rivals like Nike are launching flashy new concepts to draw shoppers in. Startup Outdoor Voices is also stepping up its game, recruiting a former Under Armour and Nike executive to be its new COO and president.
In response to uncompelling branding in past years, president and COO Patrik Frisk said Under Armour plans to be "a louder brand" this year through a "very deliberate go-to-market this year," and is working on reaching customers at all points of their customer journey, whether its physical or digital.
"Trust is earned," he said of the brand's positioning in the space, later adding that, "You've got to fight your way back onto the shelf."
The past few years have not been easy for Under Armour on the whole — the retailer has had a tough time growing in North America and also came under fire in November for a practice that allowed executives to charge costs for adult entertainment and gambling to company credit cards. Two execs were fired a month later during an internal review. However, the past four quarters have shown a brand more on the rebound, according to a report from Wedbush analysts emailed to Retail Dive.
"In all, Under Armour has made laudable progress over the past year," the analysts wrote, "though several brand issues remain as execution risk in fulfilling the company's long-term targets is high against a relatively rich valuation."