Under Armour Stock Down 24% After Disappointing Earnings Report
Under Armour (UAA) reported Q3 revenue declined 4.5% YOY (to $1.41 billion) and the company reduced full-year profit and revenue expectations (to low single digits) to “reflect lower North American demand and operational challenges”; announcements that sent shares tumbling 24% (to $12.52) by Tuesday’s close. Analysts say a lack a loyalty among consumers, their failure to connect with the female demographic and their inability to compete with Nike and Adidas from a pricing standpoint, are behind the company’s issues. CEO Kevin Plank tried to put a positive spin on the quarter, saying the company’s “international business continues to deliver (revenue is up 35%) against our ambition of building a global brand”.
Howie Long-Short: UAA shares are down more than 50% this year and 75% from the company’s 2015 peak ($54.70). The company posted their first ever loss in April and Q3 sales were down for the first time since 2005. Based on CEO Kevin Plank’s comments, I’m not sure things are going to get better. Plank stated that “no one is looking for Under Armour to have the $25 hooded fleece. They want Under Armour at the $75 and $100 price points.” He’s wrong. No one in North America, particularly women and kids, want to wear the Under Armour label; certainly, not at $100. UAA is concerned about maintaining margins, but should be focused on remaining relevant.
Fan Marino: The much-anticipated Curry 4 was scheduled to drop on Friday October 27th, but the sneaker’s release has been pushed back to November 18th due to “last minute design changes”. Retailers aren’t pleased and shareholders shouldn’t be either. The company is banking on the Curry 4 to lead its revival. With Nike owning 95% of the basketball sneaker market, analysts fear sneakerheads will have moved on to the next big release by then.