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Under Armour reported better than expected profit

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What's going on?

Under Armour doesnt look nearly as charming in the bright light of day: the sportswear brand admitted on Tuesday itll have limp sales this year, and its shares plunged almost 20%.

What does this mean?

Under Armours fourth-quarter sales came in well below analysts expectations, while its sales across the whole of 2019 were up just 1% from the year before. That alone was a kick in investors teeth, but they seemed especially concerned by the companys outlook for 2020: Under Armour revealed the coronavirus outbreak could cost it as much as $60 million in sales this quarter (tweet this).

Thats not the only hurdle ahead, either. Competition from the likes of Nike and Adidas means Under Armour is also forecasting a high-single-digit sales drop in the US this year, bringing global sales down by a low-single-digit drop. Thats not exactly the 4.2% growth investors were hoping for

Why should I care?

For markets: Those are some pricey pants.
Just when you thought Under Armour had completed brand-problem bingo, it goes and gets a full house. The company is more reliant on department stores like Kohls than other sportswear firms, but those retailers are going through their own problems: theyve had to slash prices to better compete with Amazons rock-bottom prices. And when shoppers get used to finding Under Armour on the discount racks, theyre far less likely to pay the full $350 its pants are supposed to cost.

Zooming out: Sprint toward success.
Under Armours shares didnt plunge just because its results were bad: they plunged because investors didnt expect them to be. Investors always try to predict whats going to happen in the markets ahead of time, but sometimes theyre just plain wrong. On the flip side, that means there are also pleasant surprises: a judge approved Sprints merger with T-Mobile US on Tuesday, and investors whove spent the last few months convinced it would be blocked sent the telecoms company’s shares shares up over 70%.

Originally posted as part of the Finimize daily email.

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