Under Armour’s stock has slid to around $13 per share since its 20% plunge to just over $14 on Oct 31 on lower sales and guidance in the third quarter. The price for the seller of athletic apparel and footwear represents a 55% tumble since the start of the year, making it this year’s worst performing stock of the S&P 500.
"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 Chairman and CEO Kevin Plink said in a third-quarter release.
Scaring investors was a 5% decline in revenue from last year to $1.4 billion, primarily as demand for the company’s products deteriorated in the U.S. Sales in North America dropped 12% from the previous year.
Although international sales rose 35%, that market accounts for a small portion of Under Armour’s overall income. In its Asia-Pacific market, the fastest growing with 51.9% sales expansion in the third quarter, revenue totaled only $130.3 million, compared to $1.08 billion for North America.
Apparel revenue also proved a weak spot, declining 8% under weak demand in its outdoor, women’s training and youth segments. Only footwear and accessories improved, with sales up in the low single digits.
With challenges in North America expected to persist, the company lowered revenue guidance for 2017 to the low single digits, underscoring Under Armour’s steep drop off in dominance. Sales leaped 22% in 2016, 31% in 2015 and 32% in 2014.
Under Armour’s challenges have already triggered several management changes, including the departure of its chief financial officer, Chip Molloy, and its chief marketing officer and senior vice president of the women’s and youth division, among others.
As part of a restructuring plan, the company has also tapped Ryan Drew, former head of its basketball division, to lead the footwear division, formerly its fastest growing. In the third quarter of 2016, the segment grew revenues 42% from the previous year, compared to a 2% increase in the third quarter of 2017.
Drew replaces Peter Ruppe after a new shoe named after basketball star Stephen Curry received poor reviews and hit manufacturing delays.
Under Armour has a price-book ratio of 2.69 and price-earnings ratio of 6.18. As of third quarter-end, cash on its balance sheet stands at $258 million, with long-term debt at $771 million. It also has a current ratio of 2.23.Ă‚
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