Under Armour Inc. rose in early trading after posting third-quarter sales that beat estimates, a sign the sportswear brand is getting a boost from consumer preference for comfy sportswear in 2020.

Sales in the quarter ended in Sept. 30 were US$1.4 billion, beating the average estimate of US$1.2 billion from analysts surveyed by Bloomberg. Revenue has stabilized and was flat year over over after two quarters of big declines due to the pandemic.

Key Insights

-It was online ordering, not physical stores, that drove the beat. The company’s direct-to-consumer revenue increased 17 per cent to US$540 million, driven by continued strong growth in e-commerce. Wholesale revenue dropped as department stores and other retailers who carry the brand saw a decline in foot traffic.

-Under Armour also upped its guidance for the year. Revenue is now expected to be down at a high-teen percentage rate this fiscal year. It will drop by a low-teen percentage rate for the fourth quarter, better than the previous expectation for a 20 per cent to 25 per cent drop. Inventory is also expected to be up approximately 10 per cent at the end of this year.

-Shoes were a bright spot. Even though apparel revenue decreased six per cent, the footwear segment saw a boost of 19 per cent and accessories revenue increased by 23 per cent. That reflects the trend of more Americans exercising at home.

-The company also announced it would be selling its MyFitnessPal fitness-tracking app to Francisco Partners, a private equity firm, for US$345 million. Under Armour bought it five years ago.

Market Insights

-Under Armour’s shares rose 5.1 per cent as of 7:18 a.m. in early trading on Friday. They had dropped 37 per cent this year through Thursday’s close, while the Standard & Poor’s 500 Index gained 2.5 per cent.