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Under Armour sales growth in North America trails Nike again; shares sink

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Reuters
Published
today Jul 30, 2019
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Sportswear maker Under Armour Inc on Tuesday cut its full-year revenue forecast for North America, its biggest market, as it suffered in the face of a strong performance by bigger rivals Nike and Adidas, sending its share down 11%.


Under Armour


Since its founding in 1996, Under Armour has had an uphill battle to stand out in an industry that stalwarts Nike Inc and Adidas AG have dominated for decades.

Celebrity endorsements and the company’s aggressive use of social media and the popularity of its sweat-proof apparel have helped, led by the appeal to younger consumers of its partnership with basketball MVP Steph Curry.

While Nike posted a 7% rise in North America revenue in the quarter ended May, sales for Under Armour fell 3% to $816 million, bigger than the 1.6% drop predicted by a consensus of analysts drawn up by brokerage Bernstein.

A Refinitiv consensus taking in forecasts of just three stock analysts had expected a 1.1% decline.

“We see little evidence of a material pick up in the way consumers, and especially women consumers, see Under Armour,” said Neil Saunders, managing director at research firm GlobalData.

“With the sports apparel space becoming increasingly crowded, Under Armour needs to carve out a more distinct and edgy position.”

The Baltimore-based firm said it now expected a slight decline in North America revenue for fiscal 2019 compared with a prior forecast of flat revenue. Still it stuck to its overall growth target on higher demand for shoes and apparel abroad.

The company has been spending more to open stores and improve its online offerings in international markets. These efforts helped Under Armour post growth in its Europe and Asia Pacific markets.

It has seen some success with the launch of products including Curry sneaker, HOVR shoes and Dwayne “The Rock” Johnson’s workout line Project Rock, but did not break out sales of particular lines in its main quarterly report.

The company’s net loss narrowed to $17.3 million, or 4 cents per share, in the quarter ended June 30 from $95.5 million, or 21 cents per share, a year earlier.

Excluding certain items, Under Armour posted a loss of 3 cents per share, while analysts were expecting a loss of 5 cents.

Net revenue rose to $1.19 billion from $1.17 billion, roughly in line with analysts’ expectation.

Class A common shares of the Baltimore-based company have gained 55% so far this year.

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