Under Armour Plunges as Former Highflier Posts First Sales Drop


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Under Armour Inc. posted its first sales decline as a public company, renewing concerns about a brand that was long seen as the sportswear industry’s biggest growth story.

A continuing slump in its North American business offset growth elsewhere, leading the company to slash its full-year revenue and earnings forecasts. Sales in the third quarter also trailed analysts’ estimates, sending the shares down the most since January in New York trading Tuesday.

The sports brand has been battered over the past year amid slowing growth, its first net losses and concerns about whether its nascent footwear business has faltered. Under Armour was founded on football workout gear and then fueled explosive growth by expanding into new categories. The company looked like it had a formidable footwear business that surpassed $1 billion in sales in 2016, but it has struggled this year.

“Fundamentals at Under Armour continue to erode,” Tom Nikic, an analyst for Wells Fargo & Co., said in a note to clients. “The deteriorating North American athletic market appears to have been the primary culprit.”

Under Armour fell as much as 16 percent to $13.81 in New York, the biggest intraday slide in nine months. The shares had declined 44 percent this year through Monday’s close, making it one of the worst-performing stocks in the Standard & Poor’s 500 Index.

The Baltimore-based company cut its sales outlook for the year to a gain of a low-single-digit percentage. This comes after a previous reduction in August to growth of 9 percent to 11 percent. It also lowered its forecast for profit excluding some items to 18 cents to 20 cents a share, down from a previous range of 37 cents to 40 cents.

‘Reset Year’

Chief Executive Officer Kevin Plank blamed a combination of store closings, competition and shifting tastes for the weakened business in North America, and said he expects the “difficult environment” there will continue into next year. Under Armour needed to reduce its cost structure and improve operations on multiple fronts, including supply chain and pricing, because they haven’t kept up with the company’s once rapid growth, he said.

“We must operate a better company,” Plank said on a call with analysts. “2017 has been a reset year for Under Armour.”

The company is not alone. Nike Inc., the world’s largest sports brand, has also experienced lackluster growth in the U.S. It has chalked up its woes to the struggles of longstanding U.S. retailers and not getting products to market fast enough.

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