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The Other Shoe Just Dropped For Under Armour

Retail Sector

The Other Shoe Just Dropped For Under Armour

The Other Shoe Just Dropped For Under Armour

2017 has been a tough year for Under Armour, and it’s only getting worse.

On Tuesday, Under Armour reported that quarterly sales had fallen nearly 5% from a year ago, missing forecasts by a long shot. They also had to lower outlook for the year, again.

The news sent Under Armour’s two classes of stock—the company’s UAA shares have voting rights, UA shares do not—down by nearly 20% Tuesday.

In the earnings release, CEO Kevin Plank said that the biggest issue was lower demand for its shoes and athletic apparel in the U.S., the company’s home market.



Under Armour has been growing internationally, and sales surged in Europe, Asia, and Latin America during the quarter. But those markets are small for the company, and revenue from North America still makes up more than three-quarters of its sales. North American sales tumbled 12% in the third quarter.

This is a stunning fall for the company, which was gaining market share from Nike and Adidas not so long ago.

In a coup a few years ago, Under Armour signed the Golden State Warriors star Steph Curry. Since signing the star, he has gone on to win two NBA championships and multiple MVP awards, but multiple iterations of the Curry shoes have been trashed on social media for not having the “cool” factor.

To make matters worse, reports of supply chain issues with the new Curry 4 line of sneakers have followed the company, which confirmed in its earnings call with analysts that it will delay some products to the fourth quarter because of the supply issues.

This comes after suffering negative PR earlier this year after Under Armour CEO Plank joined the White House’s manufacturing council, which is now defunct after several of the CEOs had to distance themselves from Trump after the president was reluctant to criticize neo-Nazis at a white supremacist rally. Not long after that, the president bashed UA’s Steph Curry for not wanting to visit the White House, and attacked athletes who protested the national anthem.

While Under Armour came to the defense of its star endorsers, it wasn’t enough to revive flagging sales or its suffering stock price.



“Under Armour is not so broken that it cannot be fixed. But the days of glory, when it would post double-digit uplifts in sales, are over. Now is the time to work out, slim down, and become more competitive,” wrote Neil Saunders, managing director of the research firm GlobalData Retail in a report.

Saunders says that UA should continue to focus its efforts on expanding globally, and should do more to reach women consumers just as Nike, Adidas, and Lululemon have done successfully. In July, Under Armour aimed to do just that with an ad campaign targeted to women featuring athletes such as ballerina Misty Copeland, stuntwoman Jessie Graff, and world champion sprinter Natasha Hastings, but if a 12% plunge in North American sales in Q3 says anything it’s that this campaign isn’t getting consumers shopping. At least not yet.

Q4’s results will tell us if and how much worse things can get for the company in 2017, if they aren’t bad enough now.

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