What happened
Apparel specialist Under Armour (UAA 1.81%) (UA 1.73%) trounced a rising market this week, with gains of roughly 18% through trading on Thursday. The spike added to a significant rally for the stock so far in 2021 and was sparked by positive earnings news.
So what
The company revealed on Tuesday that sales rose 6% in Q3 after adjusting for currency exchange shifts. The increase was stronger than management had expected. It was supported by a generally strong sports apparel industry and a flood of popular product releases.
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"Our third-quarter results were driven by strong demand for the Under Armour brand and our ability to execute quickly to meet the needs of our consumers," CEO Patrik Frisk said in a press release.
Under Armour's profitability jumped, too, as price increases offset cost spikes. That improvement helped net income jump to 8.6% of sales from 2.5% a year earlier.
Now what
Management raised its 2021 outlook for the second straight quarter. It now sees revenue growing about 25% in 2021 as compared to the pandemic-influenced 2020 year. The previous forecast predicted slightly slower growth. Gross margin is now expected to jump by more than a full percentage point, too, thanks to continued demand for more premium apparel.
These demand and profitability wins, combined with the company's aggressive restructuring plan, are laying the foundation for potentially surging earnings in 2022. That prospect has Wall Street understandably feeling more optimistic about the stock, despite risks around the supply chain and the competitive holiday shopping season ahead.
