Under Armour shares tank on sales miss, sees $50 million to $60 million hit from coronavirus

Earnings

An Under Armour store front is seen on November 04, 2019 in Sunrise, Florida.

Joe Raedle | Getty Images

Under Armour shares plummeted Monday morning after the company reported sales that missed analysts’ estimates during the holiday quarter and issued a bleak outlook.

It said it is facing “ongoing demand challenges” for its athletic apparel and sneakers, and is calling for sales to be down a low-single digit percentage in fiscal 2020. That includes a high-single-digit drop in sales in North America, Under Armour said. Analysts had been calling for overall sales to be up 4.2% for the year.

Providing its 2020 outlook, Under Armour said it expects the coronavirus outbreak in China to lower sales by roughly $50 million to $60 million during the fiscal first quarter.

The company is also embarking on a restructuring plan, which among other things could entail not opening its New York City flagship location. It could take between $325 million and $425 million in estimated pretax charges this fiscal year tied to these efforts, it said, including about $225 million to $250 million related to not opening the store.

Under Armour shares sank as much as 17% in premarket trading on the news.

Here’s how Under Armour did for the quarter ended Dec. 31, compared with what analysts were expecting, based on a poll by Refinitiv:

  • Earnings per share: 10 cents, adjusted, vs. 10 cents expected
  • Revenue: $1.44 billion vs. $1.47 billion expected

Under Armour reported a net loss of $15.3 million, or 3 cents per share, compared with net income of $4.2 million, or a penny a share, a year ago. Excluding one-time items, Under Armour earned 10 cents a share during the fourth quarter, in line with analysts estimates, based on Refinitiv data.

Revenue grew slightly to $1.44 billion from $1.39 billion a year ago. But it was short of expectations for $1.47 billion.

Sales in North America were up 1.9% during the quarter and rose 9.8% in Asia-Pacific. Apparel sales were up 0.2% overall, while footwear revenue was up 10.3% and accessories sales grew 1.6%.

Under Armour has been struggling to grow sales for the past few years. The company reported its first quarterly loss in 2017, as momentum for the brand started to slow. It faces intense competition from the likes of Nike, Lululemon and Adidas in the U.S. It also is more reliant on wholesale partners, such as Kohl’s, which analysts say has hurt Under Armour’s business as those retailers have suffered.

Patrik Frisk notably took over as CEO from Under Armour founder Kevin Plank on Jan. 1. Plank remains executive chairman and brand chief.

As of Monday’s market close, Under Armour’s stock has fallen about 1.5% this year. The company has a market cap of about $9.2 billion.

Read the full earnings press release here.

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