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Varsity Blues For Under Armour

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Image source: AuKirk / Shutterstock.com

What's going on?

On Tuesday, sportswear maker Under Armour reported its first-ever decline in sales as a public company – and slashed its profit and revenue expectations for the year. The share price tanked almost 25%!

What does this mean?

Under Armour is used to experiencing tremendous growth: at the beginning of 2016, revenue was growing by a tidy 30% a year. As the year went on, a slowdown in footwear sales in North America (its largest market), among other concerns, put pressure on the business. Since then, it has posted its first loss as a public company and cut jobs. A further decline in Under Armour’s North American sales was a key driver for the sales slump reported on Tuesday. The CEO blamed store closings, shifting tastes and heightened competition.

Why should I care?

For the stock: Under Armour’s fall from grace continues…

Under Armour stock started falling in the second half of 2016 as its revenue growth began to decline – and the gloom continued into 2017. Even before the results were reported on Tuesday, the stock was a whacking 44% lower than at the start of the year, making it one of the worst-performing in the market. And Tuesday’s news sent shares tumbling even further.

The bigger picture: Athletic wear retailers are scrambling for a piece of a limited pie, with one exception.

Under Armour isn’t the only apparel retailer facing trouble – concerns about a slowdown in the “athleisure” trend abound. Nike cut its sales expectations last month, and Foot Locker reported its biggest sales decline in years a couple of months ago. However, Adidas is bucking the trend in North America, taking market share from Under Armour and Nike and reporting a big jump in sales for the first half of this year, as it wins customers over with its retro Stan Smith and Superstar lines of shoes.

Originally posted as part of the Finimize daily email.

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