Sneaker company Under Armour, which has been struggling for some time now, reported that quarterly sales fell nearly 5 percent from a year ago. It also lowered its outlook for the year again, which sent the company’s two classes of stocks tumbling.
Both its voting and non-voting shares were down more than 15 percent on October 31. Even before the lackluster earnings report was released, the company’s stocks had already lost almost half their value for the year.
According to CNBC, Under Armour reported third-quarter revenue that didn’t meet analysts’ expectations, partly because it had an $85 million charge for restructuring efforts that hit the company’s books in Q3. It also expects charges of $140 million to $150 million due to the ongoing restructuring, a number higher than its initial expectations of between $110 million and $130 million.
Under Armour cut its sales expectations and is now expecting revenue to be in the low single-digit percentage range. The company expects its 2017 earnings per share to be in the range of 18 to 20 cents, adjusted. Previously, Under Armor had projected earnings of 37 to 40 cents per share.
“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,” Under Armour CEO Kevin Plank said in a statement. “Our management team is working aggressively to evolve our strategy and level of execution to proactively address these challenges.”
According to sources who spoke to CNBC, the company is exploring getting out of its tennis and outdoor brands in order to focus on its core product offerings. It is also starting a subscription box business called ArmourBox, an effort to offer customers more customizable options.
“Under Armour has put down very shallow roots,” said GlobalData Retail Managing Director Neil Saunders. “While awareness has soared over recent years and customer numbers have risen, loyalty to the brand is not deep-rooted in the same way that it is at Lululemon and Nike…Under Armour has become just another brand in a sea of brands.”
Saunders suggested that the company should continue to focus on expanding globally, as its international segments have been growing well. He also said Under Armour should do more to court women as consumers, which other sneaker and athletic wear companies have done successfully.
“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. Now is the time to work out, slim down, and become more competitive,” Saunders added.
Photo: An Under Armour store in Chicago. Credit: Sorbis / Shutterstock.com