Under Armour Sees Biggest Sales Slowdown in Six Years

October 25, 2016, 2:18 PM UTC
Courtesy of Under Armour

Under Armour, the No. 2 U.S. sportswear maker, reported its slowest quarterly sales growth in six years, hurt by slowing growth in North America, its biggest market.

The company’s shares were down about 16.2 percent at $31.77 in volatile trading before the bell on Tuesday. The stock had fallen about 20 percent in the last 12 months.

“Despite the overall robustness, there are a few emerging signs that Under Armour is now headed into a tougher period. Foremost among these is the lower domestic growth rate within North America,” Conlumino retail analyst Carter Harrison said.

Although, net sales in North America grew 15.6 percent in the third quarter ended Sept. 30, it was below the 20 percent growth mark that the company normally breaches, Harrison said.

Under Armour (UA) had flagged in July that third-quarter sales would slow, mainly because of the loss of retailer Sports Authority as a customer due to bankruptcy.

Gross margins for the third quarter fell to 47.5 percent from 48.8 percent last year, as it had to resort to increased promotions to sell products that would usually have been sold at Sports Authority.

Still, total sales rose a healthy 22 percent to $1.47 billion, helped by demand for new styles such as Slingform and Bandit 2 in running shoes, and for men’s and women’s training apparel.

Under Armour’s apparel revenue rose 18 percent to $1.02 billion in the third quarter ended Sept. 30. Footwear sales rose 42 percent to $279 million in the quarter, helped in part by the continuing popularity of shoes endorsed by NBA star Stephen Curry.

“Stephen Curry…brand continues to resonate and drive incredible momentum in new markets,” Chief Executive Kevin Plank said in a statement.

Net income rose to $128.2 million in the quarter from $100.5 million a year earlier. On a per-share basis, earnings rose to 29 cents from 23 cents in all its stock classes: Class A, B and C.

Analysts on average had expected a profit of 25 cents per share and revenue of $1.46 billion.

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