Under Armour’s shares fell to a record low on Tuesday after the “athleisure” pioneer reported weak North American sales, downgraded its guidance and launched a restructuring plan.
Under Armour, which has been facing increasing competition in the athletic wear market and criticism that its products are not fashionable, posted a loss of 3 cents a share in the second quarter on revenue of $1.088 billion.
Analysts had forecast a loss of 6 cents per share on revenue of $1.077 billion. A year ago, the company lost 12 cents per share.
“Our second quarter performance validates the strength of our multiple growth levers to deliver solid results in today’s dynamic global environment,” CEO Kevin Plank said in a news release, noting that the company’s sales have more than doubled in the past three years.
But Under Armour also reported that second-quarter sales in North America rose only 0.3%, well short of the double-digit growth it posted until last year. In trading Tuesday, its stock dropped more than 8%, reaching a new intraday low of $18.20.
“Given that North America still accounts for over three-quarters of Under Armour’s revenue, a chilly performance here means the company as a whole has caught a cold,” GlobalData Retail analyst Anthony Riva wrote in a client note.
According to Reuters, Under Armour has been losing market share to Nike and Adidas in North America, reflecting “its inability to attract shoppers with its new offerings in a market that is shrinking as ‘athleisure’ products … go out of fashion.”
“While brands like Nike, Adidas and Puma are thriving from retro revivals and casual looks, UA has struggled to develop an appealing shoe,” said Jane Hali, CEO of retail investment research firm Jane Hali & Associates.
As part of its restructuring, Under Armour will cut 277 jobs, or 2% of its workforce. Excluding restructuring costs, it now expects earnings for the full year to fall within 37 cents and 40 cents per share, compared to analysts’ estimates of 42 cents.
“We’ve identified a number of areas to enhance our operational capabilities, drive process improvement and gain greater efficiencies,” Plank said.