It wasn't too long ago that many analysts saw Under Armour as being the dark horse of the activewear arms race. Though founded in 1996, the Baltimore-based wunderkind began an aggressive expansion in 2014, readied with a star-studded, surely not inexpensive roster of contracted talent that ranged from Gisele Bündchen to Steph Curry. Under Armour's rapid, growth led many to wonder if the company — and, as of April 2016, its $1 billion footwear business — could one day surpass Adidas or, dare we say it, even Nike?
If only judging from Under Armour's latest sales results, which were announced in an earnings call on Tuesday, the sportswear giant has realized that that's not going to happen anytime soon. After a spectacular start to 2016, the company has been battling a slowed sales climb for the last year, the results of which seem to have culminated in a very rough third quarter. In the three months ending Sept. 30, 2017, Under Armour reported a 5 percent dip in revenue to $1.4 billion, with wholesale revenue down 13 percent to $880 million and apparel revenue down 8 percent to $939 million. Its North American performance was particularly lousy, with revenue declining 12 percent.
Revenue, however, is not the worst of it: At press time, Under Armour's shares on the New York Stock Exchange (under UAA) fell 23 whole percentage points to $12.52 from the start of the day; Business of Fashion reports this being the "biggest intraday slide in nine months." Its stock is tumbling, and fast.
How did this happen? There's nothing that sends a company's stock into a tailspin quite like when its performance misses analysts' estimates, especially when the company in question both recognizes said shortcomings and reevaluates its plans for the future. That's just what Under Armour did, announcing on Tuesday that it slashed its sales forecast, and for the second time this year: In August, it cut its growth expectations from 11 to nine percent, now lowering that to a low single-digit percentage. It's enough to make anyone, particularly investors, skittish.
CEO Kevin Plank attributed much of this to the aforementioned North American business, which has slipped in recent months. "Against this difficult backdrop, our management team is working aggressively to evolve our strategy and level of execution to proactively address these challenges," said Plank in a release. This, coincidentally, involves a lot of the same things Nike is prioritizing as it, too, aims to get its sales back on track, such as improvements in innovation, supply chain efficiency and consumer-facing interactions. "We must operate a better company," Plank said to analysts on an earnings call.
The good news here is that, well, it's not all bad news! Under Armour's momentum overseas is strong, with international revenue up 35 percent and a whopping 52 percent in the Asia-Pacific regions. It also has structures in place to get it back on its feet, or at least out of the North American pit into which it has fallen. Here's to, like, realizing stuff.
UPDATE, Wednesday, Nov. 1, 10:52 a.m.: After WWD first reported that Ben Pruess, Under Armour's president of sports fashion and architect of the more modern, fashion-adjacent Under Armour Sportswear (UAS) collection, was set to exit the brand, a company spokeswoman confirmed the news to Fashionista on Wednesday morning. Under Armour stated that Kevin Eskridge, who currently serves as chief product officer for the brand, will now assume responsibility for UAS on an interim basis. Designer Tim Coppens, who heads up UAS by Tim Coppens and reports directly to Pruess, will also depart following the line's spring collection, which will hit stores in early 2018.
Additionally, UAS will now become Under Armour Sportstyle, an initiative that will serve as a pinnacle of expression for the company via collaborations with designers and influencers, starting with A$AP Rocky next year.