(Reuters) - Under Armour Inc beat estimates for fourth-quarter revenue on Tuesday, sending shares up nearly 11 percent as strong international sales alleviated a bad run of results that made it one of the most shorted stocks on Wall Street.
The company has been trying to transform its business in a fiercely competitive U.S. sportswear market that has seen prices sink, retail sports stores go bankrupt and its rate of sales growth more than halve.
Management embarked on a plan last year to cut jobs and close stores and focus on selling directly to consumers through its online and own-brand stores, also signing models Kendall Jenner and Bella Hadid in a major marketing push.
Investors have been unconvinced, pushing the shares down by a third in the past year and making the company the S&P 500’s most shorted stock as of Jan. 31.
Tuesday’s results suggested some of the company’s efforts had paid off in the fourth quarter, with direct-to-consumer sales rising 11 percent.
International revenue, especially in the Asia-Pacific, saw strong growth, boosting overall sales up 5 percent to $1.37 billion. Analysts on average were expecting $1.31 billion, according to Thomson Reuters I/B/E/S.
Sales in North America, however, continued to decline, falling 4 percent as rivals Nike Inc and a resurgent Adidas continued to gain market share, powered by new launches and technical advances in both shoe soles and apparel fabrics.
The company reported a loss of $87.9 million, or 20 cents per Class C share, in the quarter ended Dec. 31, compared with a profit of $103.2 million, or 23 cents per share, a year earlier. The loss was largely due to restructuring charges and a one-time tax expense.
Excluding items, the company met analysts’ expectations that it would break even for the quarter.
Under Armour also said on Tuesday it would further restructure its business, by closing facilities and terminating leases, resulting in a pre-tax charge between $110 million and $130 million this year.
For 2018, the company said it expects net revenue to grow in the low-single-digit percentage range, taking into account a mid-single-digit decline in sales in North America.
It also expects gross margins to rise about half a percentage point to 45.5 percent as it cuts back on promotional activity and product costs.
Additional reporting by Siddharth Cavale in Bengaluru; Editing by Shounak Dasgupta