Under Armour shares dropped sharply after the sneaker company reported lower-than-expected quarterly sales and trimmed its outlook amid lower demand in the key U.S. market.
For the third quarter, Under Armour’s total revenue fell 4.5% to $1.41 billion while net profit declined to $54.2 million, or 12 cents per Class C share, from $128.2 million, or 29 cents, a year ago. Excluding one-time charges, Under Armour earned 22 cents a share.
Analysts had expected adjusted earnings of 19 cents a share on revenue of $1.5 billion. In trading Tuesday, Under Armour Class A shares fell 23.7% to $12.52, bringing the stock’s decline to 58% for the year so far.
“While our international business continues to deliver against our ambition of building a global brand, operational challenges and lower demand in North America resulted in third quarter revenue that was below our expectations,” CEO Kevin Plank said in a news release.
“Our management team is working aggressively to evolve our strategy and level of execution to proactively address these challenges,” he added.
Under Armour continued to grow internationally, with revenue up 35% in the latest quarter. Sales surged in Europe, Latin America and Asia. But those markets account for only 22% of total revenue and in North America, sales plunged 12%.
“It’s a stunning fall from grace for Under Armour, which not that long ago was gaining market share at the expense of Nike and Adidas,” CNN said, noting that the signing of NBA star Stephen Curry has not been a “slam dunk success.”
There have been reports of supply chain issues with the new Curry 4 line of sneakers and Under Armour confirmed during its earnings call that it will delay some products to the fourth quarter.
The company is now projecting fourth-quarter revenue in the low single-digit percentage range, compared to a previous forecast of growth of 9% to 11%.
“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,” Neil Saunders, managing director of the research firm GlobalData Retail, wrote in a client report.