管理層發言
Good morning everyone and welcome to the Under Armour's Q4 2024 Earnings Conference Call. All participants will be in a listen-only mode. After today’s presentation, there will be an opportunity to ask questions. Please note today’s event is being recorded. At this time, I would like to turn the floor over to Lance Allega, Senior Vice President, Investor Relations, Treasury, and Corporate Development. Sir, please go ahead.
Good morning and welcome to Under Armour's fourth quarter and full year fiscal 2024 earnings conference call. Today's event is being recorded for replay. Joining us on today's call are Under Armour President and CEO, Kevin Plank; and CFO, David Bergman. Our remarks today will include certain forward-looking statements that reflect Under Armour management's current view of our business as of May 16, 2024. These statements may include projections for our business in the present and future quarters and fiscal years. Forward-looking statements are not guarantees of future business performance and our actual results may differ materially from those expressed or implied in the views provided. Statements made are subject to risks and other uncertainties detailed in this morning's press release and documents filed regularly with the SEC, including our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q. Today's discussion may also include the use of non-GAAP references. Under Armour believes these measures give investors a helpful perspective on underlying business trends. When applicable, these measures are reconciled to the most appropriate U.S. GAAP measures, reconciliations along with other pertinent information can be found in this morning's press release and at about.underarmour.com. With that, I'll turn the call over to Kevin.
Thank you, Lance, and everyone joining us this morning. We've got a lot to get through on today's call, including some extended prepared remarks, so let's dive right in. Four plus years removed from the President and CEO role at Under Armour, I'm bringing a clear sense of purpose and 100% commitment with zero distractions from making UA excellent. I gained unique perspective from the Executive Chair Board seat and while I've maintained a presence in the business throughout, that role was very different from the responsibility and opportunity I now have as CEO to affect the day-to-day decisions of this brand. I look forward to applying these lessons with a renewed approach to leadership. During this time, our industry has undergone significant changes including a global pandemic that tested the resilience of the consumer value chain, and increased competition with many new capable entrants that have altered shopping behavior and preferences.
However, our aspiration to build the world's best athletic performance brand has not changed. Our goal has always been to be a premium brand of choice, driven by industry-leading athletic performance products, inspirational storytelling, and elevated consumer experiences. Yet, we have not consistently nor holistically delivered on this ambition. A lack of continuity increased complexity has challenged our execution. With several CEOs and Heads of Products Marketing in North America over the past five years, ongoing turnover of critical leadership has been central to our inability to stay agile and decisive. From uneven execution across product and marketing to suboptimal segmentation, wholesale relationships, and DTC performance, there remains a significant opportunity to activate more effectively across the dimensions that matter to drive improved brand affinity and therefore demand. With several of our executive team being new to their roles, my top priority has been clarity and stability in our business.
To address this, we will reconstitute Under Armour’s brand strength over the next 18 months by focusing on brand building fundamentals, like making great products, telling the best story about those products, and servicing every aspect of delivering our business while building the best team. We have an incredible foundation from which to reconstitute a winning culture. And while I have no illusions that this has to be a repeat of how this brand was built the first time, there are certainly parts that will run. That said, I did not arrive at the next part of the call easily but it is where we are today. Amid a confluence of factors including lower wholesale orders, proactive decisions to restore brand health to our e-commerce business, and lead times to bring new products to market, we are at a crossroads of defensive necessity and offensive opportunity. Therefore, before driving forward, we'll be taking a larger step back in fiscal 2025 with an expectation that our revenue will be down at a low double-digit rate.
This includes an approximate 15% to 17% decline in North America, driven by three factors that I will go into later in the call. In our international regions, we expect revenue to be down at a low single-digit rate due to some conservative macro consumer trends we see, as well as applying lessons learned here in North America to protect the brand strength that we built in EMEA, APAC, and Latin America. From a channel perspective, we see our wholesale business down at a low double-digit rate, and direct to consumer down approximately 10% due to proactive actions to significantly reduce the discounting level within our own e-commerce business. This reflects some of the foundational steps in our ambition to create a more premium stance for our brand. By product, we expect apparel and footwear sales to be down at a low double-digit rate and our accessories business to remain essentially flat year-over-year.
Even with this revenue contraction, we expect a gross margin improvement of 75 to 100 basis points due to the material reduction in promotional and discounting activities through our DTC business and proactive product and costing initiatives. Turning to SG&A, as we work to streamline our business further, we anticipate our expenses to be down 2% to 4% in fiscal 2025. This includes a Board-approved restructuring plan to help strengthen and support additional financial and operational efficiencies. While Dave will provide more detail, we expect to incur a total estimated pre-tax restructuring and related charges of approximately $70 million to $90 million. Excluding the midpoint of this restructuring range, we expect $130 million to $150 million in adjusted operating income, representing $0.18 to $0.21 of adjusted diluted earnings per share. This is not where I envisioned Under Armour playing at this point in our journey.
That said, we'll use this turbulence to reconstitute our brand and business, giving athletes, retail customers, and shareholders bigger and better reasons to care about and believe in Under Armour’s potential, a potential backed by nearly 1900 retail stores and a worldwide presence in almost 100 countries, respected by athletes as a podium brand with a distinctive positioning of innovation and performance that is truly unique. From a product perspective, we're not just chasing the low-hanging fruit of sportswear. We're reinvigorating our culture of amazing athletes with a consistent drumbeat of innovation. The good news is that we're already doing this. For example, we delivered six new footwear drops in February alone. The StealthForm Uncrushable Hat debuted on Jordan Spieth at this year's Masters golf tournament, which is now on preorder for athletes at a $45 price point. We will make sure that if a product is important enough for us to make and release, it's also important enough to celebrate with storytelling.
So giving stakeholders reasons to believe begs the question, how do we plan to strengthen the Under Armour brand? Well, it starts by reminding everyone, ourselves included, why we're here. Under Armour is a sports house. This is our reason for being, it's our DNA and identity. Under Armour is about athletes and innovation. Leading with team sports, we equip athletes to push the boundaries of what is possible. At the backbone of all this is an authentic passion, it is an identity of grit. Under Armour was not born on that podium but of an underdog spirit. That underdog grit is our differentiator. And we will embrace this mentality in this chapter as a brand. With this brand positioning recentered and solidified, we're narrowing our Protect this House strategy to rebuild our core through three main priorities. First, is delivering better products and storytelling to amplify demand and loyalty.
Second, is running smarter plays by simplifying and optimizing our systems, structure, and processes. And third, is elevating consumer experiences, mandating excellence where, when, and how athletes choose to engage with our brand and transact. So starting with delivering better products and storytelling, this is about constant movement with our athlete product and story. To correct this, we must reprioritize our innovation agenda. We're committed to making great products and we must eliminate those that do not meet our high standards. We are being intentional and focused on showing why our products perform like no other in the industry. We will work to streamline our operations and drive a better consumer experience. As we start to replicate that and become more famous for fewer things, it will help establish Under Armour's strong position in a competitive landscape where authenticity matters.
I want to emphasize that we continue to focus on making the very best athletic products and crafting narratives that underline our unique brand story. This is a time of rebuilding and repositioning Under Armour, and while we face challenges, I am confident in our path forward. We have a clear strategy in place and we will execute to regain our standing as one of the top athletic brands.
Thanks, Kevin. Starting with our fourth quarter fiscal 2024 results, which were in line with our outlook, revenue was down 5% to $1.3 billion with a 10% decline in North America due to softer wholesale demand and lower sales to the off-price channel. Our DTC business was also down during the quarter with positive store growth offset by softness in our e-commerce business. EMEA revenue was up 10% or 7% on a currency-neutral basis driven by strength in our wholesale and DTC businesses. APAC revenue was up 1% in the quarter or 5% on a currency-neutral basis driven by positive DTC sales, while wholesale results remained flat. And in Latin America, revenue was up 20% or 12% on a currency-neutral basis. From a channel perspective, fourth quarter wholesale revenue was down 7% driven by softer demand in our full-price and distributor businesses. Our direct-to-consumer business was flat with 7% growth in our stores, offset by a 7% decline in our e-commerce business.
On the bottom line, we realized a diluted earnings per share of $0.02 or adjusted diluted earnings per share of $0.11. For the full year, fiscal 2024 revenue declined 3% to $5.7 billion primarily due to challenges in our North American business, partially offset by international growth. Our full year gross margin increased 130 basis points to 46.1% driven primarily by supply chain benefits. This was partially offset by proactive inventory management actions, increased promotional activities in our direct-to-consumer business. Full-year SG&A expenses were up 1% to $2.4 billion. Adjusted SG&A expenses were down 2% to $2.3 billion. We're looking ahead to fiscal 2025 with an expectation for a low double-digit revenue decline and gross margin improvement as we retune our base over the next 18 months while managing costs aggressively. Our fiscal 2025 restructuring plan amplifies our focus on driving higher returns to deliver more consistent, long-term shareholder value.
As we wrap up today's prepared remarks, I want to reaffirm our commitment to shifting Under Armour's trajectory. We are determined to turn rhetoric into results and build a brand that stands for excellence in performance and innovation. The work we are doing today will solidify Under Armour's future and ensure we remain a leader in the athletic industry. I ask for your support and patience as we embark on this journey together.
分析師問答
Our first question today comes from Simeon Siegel from BMO Capital Corp. Please go ahead with your questions.
Thanks and good morning. Kevin, recognizing the tone shift, it makes me think of the last time you successfully focused on building a healthier company. How do you think about this go around of the brand elevation versus revenue contraction versus the last time you successfully reelevated the brand and the gross margins? How do you expect the timeline of that improvement to look? Is your expectation in North America would return to growth in 2026 or later? And then, Dave, can you just remind us what percentage of the OPEX or fixed versus variable costs the gross margin gains will impact?
Thank you, Simeon. I don't think there is a repeat available to us, but certainly many lessons of what brand building looks like. This is going to be a little different, and frankly, just using all the reasoning, thoughtfulness, and hopefully wisdom that we've gained over the years to apply to this chapter is important. The consumer sentiment and reaction to retail and inventory levels influence our North America performance. The majority of our difficulties have been self-inflicted, and the good news is we can control that. We can fix that. We need to ensure that only the amazing products we make make it to market, which is why we plan to eliminate 25% of our SKUs to give our teams room to focus on making the best products that we will proudly market.
Relative to variable and fixed costs, if you exclude the compensation cost, it's a little bit less than a third of our SG&A base. We're working on reducing fixed costs and managing our SG&A effectively.
Great, thank you. Kevin, I'm interested in your renewed view on leadership. Can you tell us what's renewed in your approach to leadership today versus before? How is this going to help drive Under Armour forward?
Thanks, Jay. I believe it's crucial to set a vision and empower the team to achieve it. Over the last ten months, we brought in new talent and focused on collaboration. We have capability here and the energy is high. It’s about building a strong team that feels invested in our shared vision. We're leveraging a mix of legacy talent and new hires to push our agenda forward.
Hi, good morning. Can you clarify how much of the macro factors are driving the low single-digit percent decline in international revenue? Is your international outlook conservative? Also, can you discuss e-commerce progress?
Thanks, Bob. We're cautiously approaching the international outlook. Our experience has shaped this perspective. We're seeing some softness in EMEA due to inventory issues, but we're focused on quality and not chasing lower-quality revenue. In e-commerce, we recognize our digital story hasn't aligned with our product offering, which is an area we're planning to improve.
And ladies and gentlemen, with that, we'll be concluding today's question-and-answer session as well as today's conference call and presentation. We thank everyone for joining this morning. You may disconnect. Have a great day.