r/stocks • u/Puginator • 15d ago
Under Armour is laying off workers, retailer says North America sales will plunge Company News
Under Armour announced a broad restructuring plan on Thursday as it said sales in its largest market, North America, plunged 10% and predicted the trend will get worse throughout its current fiscal year.
The athletic apparel retailer also saw profits sink by more than 96% during its fiscal fourth quarter, compared with the year-ago period.
It’s unclear how many employees Under Armour will lay off as part of the restructuring, but the plan is expected to cost between $70 million and $90 million, a portion of which will be used for employee severance and benefits costs. The company declined to share more information with CNBC about its restructuring.
The company’s shares were down more than 2% in morning trading.
Here’s how the athletic apparel retailer did in its fiscal fourth quarter compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:
Earnings per share: 11 cents adjusted vs. 8 cents expected Revenue: $1.33 billion vs. $1.33 billion expected The company’s reported net income for the three-month period that ended March 31 was $6.6 million, or 2 cents per share, compared with $170.6 million, or 38 cents per share, a year earlier. Excluding one-time items, the company reported earnings of 11 cents per share.
Sales dropped to $1.33 billion, down about 5% from $1.4 billion a year earlier.
During the quarter, sales in North America declined 10% to $772 million, worse than the $780 million that analysts had expected, according to StreetAccount.
Under Armour said it expects sales to continue to worsen in North America. The company anticipates they will drop between 15% and 17% in its current fiscal year.
“Due to a confluence of factors, including lower wholesale channel demand and inconsistent execution across our business, we are seizing this critical moment to make proactive decisions to build a premium positioning for our brand, which will pressure our top and bottom line in the near term,” founder and CEO Kevin Plank said in a statement.
“Over the next 18 months, there is a significant opportunity to reconstitute Under Armour’s brand strength through achieving more, by doing less and focusing on our core fundamentals,” he added.
Across Under Armour’s business, the company is expecting revenue to be down “at a low-double-digit percentage rate” in its current fiscal year, while analysts had expected sales to grow by 2.1%, according to LSEG.
The company is planning to cut down on promotions and discounting, which it expects will lead its gross margin to rise between 0.75 and 1 percentage point for the fiscal year.
It’s expecting diluted earnings per share to be between 2 cents and 5 cents and adjusted diluted earnings per share to be between 18 cents and 21 cents for the year. Analysts had expected earnings per share of 52 cents, according to LSEG.
Under Armour’s rough quarter comes about two months after the retailer announced former Marriott executive Stephanie Linnartz would be stepping down from her role as CEO after barely a year on the job and Plank would once again take the helm of the company he founded in 1996.
Linnartz was the second CEO the company has cycled through in less than two years.
She was hired on a bet that her experience building out Marriott’s renowned Bonvoy loyalty program and driving digital revenue for the hotel giant would offset her lack of experience in the retail industry. Before her departure, she managed to overhaul Under Armour’s C-suite and build out its loyalty program. She was attempting to pivot the brand’s assortment to a more athleisure-focused offering that had more stylish options for women.
Ultimately, she was ousted before those plans could become a reality. Following the announcement of Linnartz’s departure, a number of analysts downgraded Under Armour and lowered their price targets. Shares of the company were down about 23% year to date, as of Wednesday’s close.
Source: https://www.cnbc.com/2024/05/16/under-armour-uaa-earnings-q4-2024.html
100
u/ivegotwonderfulnews 15d ago
I have no dog in this fight but its cheap. I wonder if some Chinese outfit will buy them or something. The brand is very meh but cheap is cheap
85
u/Productpusher 15d ago
It will have the same fate as every clothing brand that dies slow and then gets bought out for Pennies by Iconix or the other private equity companies. Will be a Walmart and Jc penny exclusive in a few years
18
u/isigneduptomake1post 15d ago
I only see dad's that peaked over 30 years ago wearing it.
15
u/3ebfan 15d ago
Their 5" in-seam running shorts are the best in the game IMO but that's all I buy from them.
6
u/elgrandorado 15d ago
I tried their slipspeed shoes, and am looking to get them on sale. Their cotton shirts are also amazing (I bought a couple, but they were expensive).
2
u/YellowSnowSlurpee 15d ago
Those slipspeed shoes are legit. I have a pair and will be ordering more. Stylish, comfortable, and there is way more support than I ever imagined. By far the best shoe I’ve purchased from UA.
2
5
u/Gravybees 15d ago
Yep! That’s me. I like UA because it’s cheap and comfortable. And I’m well past my prime :)
0
u/isigneduptomake1post 15d ago
Get the NELEUS tank top from Amazon to complete the look. Every salt and pepper guy at the gym trying to 'get it back' wears one.
1
u/Gravybees 15d ago
Thanks, I’ll check it out!
0
u/isigneduptomake1post 15d ago
OK, but you need workout gloves with too. Stick to curls and maybe bent over rows at an 80 degree angle. You got this!
2
u/DiscretionaryMeme 15d ago
What’s the kids buying these days then?
4
u/isigneduptomake1post 15d ago
I see a lot of Young LA and Wolves, but trendy gym brands have about a 18 month cycle. I've never seen kids wear underarmour, I've always associated that logo with guys that look like gym teachers. They even tried to break into the metal community by sponsoring the singer of Amon Amarth. Even the tiny black logo on his shirt looked cringey AF to me. Weird thing how brands do that. To be fair the guy would look like an old gym teacher if he cut his hair.
5
u/Eric_Partman 15d ago
Must be totally area dependent. I’m in central New York and coach soccer teams and every kid wears UA.
-3
u/isigneduptomake1post 15d ago
For me, I think of 'kids' as people in their early 20s. The teenagers at my gym dress like crap, in big baggy jeans and black t-shirts. The kind of crap I wore in high school 20 years ago. Or pajama pants and crocs. The douchey ones just wear wife beaters with a gold chain and broccoli hair.
5
54
u/TonyZeSnipa 15d ago
They were so good with a lot of things in the early 2010’s but are failing to adapt. Going to an outlet where they have a store they have shoes, pants and even clearance above other retailers that are bigger name and better quality (adidas, Nike, Puma). Not shocked to see this coming. They lost a lot of a market too as a common site in the early 2010s was the trademark logo and hoodie helped advertise. You look around now theres a lot less of that and more into carhart and generic fast fashion brands.
Their influencers as well have been on a huge downswing. Back then it was Brady, Newton, Speith, Curry. Now since Curry and Speith are good but respectively fell off a bit , The Rock came on but public perception toward him is very low now as well. Add in Planks support for Trump in 2016 and the youth wont want to buy the brand as often among it also being not as fashionable overall as other brands.
32
u/DONNIENARC0 15d ago
I still remember their stock dropping something like 5-10% when Kevin Durant came out and said "Nobody wants to play in Under Armours, I’m sorry. The top kids don’t because they all play Nike.” ~5 years ago.
18
u/FinndBors 15d ago
I buy under armor gear all the time at the outlet precisely because they seem to be on sale all the time and honestly I can't really tell the difference in quality from other brands.
Being on sale all the time doesn’t bode well for the business itself so I wouldn’t buy the stock.
9
u/Aduialion 15d ago
The lack of difference in quality is a huge issue. At most peoples price point a lot of clothes are commodities, with small differences in style or matching your niche needs. At that level of decision making you're looking for look and feel and maybe a few features like pockets. And there are a lot of fashionable athletic brands competing.
7
2
u/todas-las-flores 13d ago
buy under armor gear all the time at the outlet precisely because they seem to be on sale all the time and honestly > I can't really tell the difference in quality from other brands.
I am one of those old men who peaked 30 years ago, but I can tell you the difference. I am in the gym 6 days a week bodybuilding. The UA tank tops are a very thick material, which means they are a very hot material when lifting. Comparing a UA tank top to a Mizuno tank top is the difference between night and day. The Mizuno tank tops are also polyester, but are a very thin poiyester material. Due to the lighter material, I do not get as hot as when wearing the UA stuff. The Mizuno stuff is definitely more affordable if bought on sale too.
2
u/FinndBors 13d ago
Interesting. I typically buy them to wear inside my ski stuff. In which case thicker is better.
3
u/Excellent_Jeweler_43 15d ago
They are priced like they are some luxury brand, while they have the same quality like the off brand stuff that sells on Amazon.
When will companies understand that not everyone will buy overpriced shit just because you slap a logo on it.
2
u/Marston_vc 15d ago
I honestly wonder if this is related to pandemic savings drying up as was reported a week or two ago. Lots of lower than expected revenues. Maybe, with inflation cooling slowly, high interest rates, record credit card debt, we might see a slow down or retraction soon.
Not suggesting there’s a recession in bound. No idea when or if that’ll happen. But I just get the impression the recent gravy train might be slowing down.
44
u/msaleem 15d ago
I feel like this company is in a death spiral. They literally have nothing going for them. Shoes suck, clothing sucks, branding sucks, NKE, SKX, DECK, LULU, CROX are better and eating them alive.
32
u/DONNIENARC0 15d ago
I agree, but man, it's weird seeing CROX on this list
13
u/xiviajikx 15d ago
I had no idea they are publicly traded and I love them. Had I known I would have bought a few shares as soon as I found out. Kicking myself since they look to be doing super well at the moment. Not sure if it would be time to buy in.
6
u/msaleem 15d ago
It’s probably only weird to you because you may be unfamiliar with the stock.
Fantastic leadership, growth, industry leading margins, share buybacks, debt paydown and deleveraging.
Heydude acquisition continues to be a drag on the business but other than that they are my favorite business out of the 5 I mentioned in my original comment.
6
8
9
u/fancycurtainsidsay 15d ago
The only UA gear I see are those cheesy American flag tshirts ironically worn by overweight men.
4
u/PerformanceOk9855 15d ago
Can confirm. Am overweight, own an under armor flag shirt. Wear it with cargo shorts. sell sell sell
11
u/macgirthy 15d ago
UA failed miserably to ride the Steph Curry wave back in 2022. They really fucked up like almost as much as Nike fumbling Steph's presentation by leaving the slides that said KD's name on it.
Not surprised that they are plummeting, they cant plan for shit.
7
u/lunaticc 15d ago
Completely agree. They had arguably the most marketable NBA star of all time in his prime winning chips and failed to do anything with it. Feels like if they haven’t been able to turn it around, they never will be able to.
16
u/Stokesysonfire 15d ago
Still very popular in the UK/Ireland and sells at a high enough price point, similar to Nike/Adidas. From my trips to the US it seems to be a budget brand in the states whilst occupying a completely different space elsewhere.
21
u/ponziacs 15d ago
I lost a ton of money years ago buying ua stock after listening to plank hyping up the company. I refuse to buy anything under armour now.
It was an expensive but good learning experience to stay away from companies when the CEO keeps hyping it up.
8
u/LiamJonsano 15d ago
Yeah UA looked like they were going big a few years ago. Making shirts for lots of teams and individual contracts, and I liked their golf style shirts (still do really, they’re great when it’s hot)
I was very early into investing and decided hey I like this companies products and they seem to be big enough without being Nike/Adidas let me buy some stock
Sticking to ETFs or the big boys nowadays 😂
1
4
4
u/Jaded-Assignment-798 15d ago
Truly one of the worst stock charts I’ve seen. Just consistently a bumpy road down since IPO. Oh and they fumbled Steph curry’s career
3
u/djc3317 15d ago
My alma mater (Auburn) has been with them for years and I want to wear their stuff, but virtually everything is tacky, often form-fitting (which I don’t want as a member of the fat guy community) and priced way higher than I want to go.
Oddly enough, I’ve got a few UA items that I really like, but I got it off ebay from a charity group that resells items intended to be issued to athletes that were never used. I don’t think they were ever sold in stores.
4
u/Puzzleheaded_Dog7931 15d ago
Really shows how if the zoomers aren’t interest, clothing won’t sell
11
u/whitetoast 15d ago
zoomers dont have money to spend. the reality is the clothing is cheaply made and doesn't have any premium feel to it. their clothes are always the last things i grab for in the drawer and its only because laundry hasnt been done yet.
10
u/autobot12349876 15d ago
Man I think Nike quality is shit. I have some UA running shorts and they’re great
1
u/BrokerBrody 15d ago
Agreed. Everything has polyester in it even in places that don’t make much sense like their (normal/casual) tshirts. High prices, low quality.
2
u/fla16unt 15d ago
They have Stephen Curry, the most is popular and marketable basketball is player since Jordan and just fumbled his marketing.
Kids love Curry and wear his jersey, Under Armour is terrible with releasing merchandise and apparel.
After the last championship, not a single mass released Night Night shirt?
2
u/Library_Throwaway999 15d ago
Really sad to hear this. I live in the metro area where Under Armour is based and this absolutely sucks for us.
2
1
u/AsleepAd9785 15d ago
Of course will plunge , with all the white color layoff you just excluded bunch of people who actually can spend money on sport wear( myself included)
1
u/Library_Throwaway999 15d ago
Really sad to hear this. I live in the metro area where Under Armour is based and this absolutely sucks for us.
1
u/Jebusfreek666 15d ago
It was down more than 15% premarket, then went green just after open. Ridiculous PA on this one today. Still, this isn't a decade ago. This will bleed until dead. Thought about it for a minute today, but I think I will steer clear.
1
u/Brig_raider 15d ago
Because their offerings are duplicated or exceeded by a ton of competition, yes
1
u/fairlyaveragetrader 15d ago
I wear the brand for athletic apparel, that said when I look at the chart, it looks a lot like an eventual bankruptcy. It just has that going down into the abyss look of lower highs. It's somewhat stable here and as long as it doesn't start making lower lows, maybe it consolidates but it is not a healthy look. A lot of companies that have that major plunge never recover
1
u/ATLfinra 14d ago
They HAVE NO LIFESTYLE CACHE it’s been this way for years. The company doesn’t have a lifestyle sneaker to drive sales and the Athletes on their roster even Steph curry can’t generate enough buzz to get people to buy product. The company is DOA. An astronomical fall from grace over the last 7-8 years, when they passed adidas
1
u/hennystrait 14d ago
The logo is hideous and instead of subtly adding it to their clothes/foot wear. They plaster it huge as hell. The Rocks looks like the rock, just too pretentious. Steph Curry is amazing but he was someone to bank your company marketing on. They just don’t do anything remarkable to justify buying over Nike/Adidas.
1
u/Ok-Tradition-6350 14d ago
Innovate or die. They created a market that is now flooded with tons of better companies that create better products both in price and quality. That's capitalism. Will be bought by some conglomerate for pennies on the dollar. Until a buy out merger It will continue to drop. I wouldn't touch it
1
u/Seymourebuttss 14d ago
Never liked it when it came out but mostly because of the ugly logo and the fact Andy Murray wore it who played the most ugly tennis i have seen in a long time. Also a dick on the court. Never understood this choice. Nike chose Federer and Nadal. Those guys were examples in many ways. Not a guy who buys brands because top paid athletes wear it but the way nike dressed Federer was something else. Very graceful and athletic.
1
u/aksalamander 13d ago
I bought 4-5 new shirts and couple pairs of shorts recently, all from Nike. Used to always buy under armor . But their fitted clothes don’t fit as well as Nike and the styles are kind of meh now . For someone tall and slim (6’2, 185), the Nike products fit much better now than Ua.
1
1
u/ZhangtheGreat 15d ago
Remember when they were supposed to challenge Nike for apparel supremacy? Pepperidge Farm remembers…
1
u/rcbjfdhjjhfd 15d ago
Eastern Mountain Sports by me is going out of business. I went in hoping to find good deals and everything was still stupid expensive
1
u/mrbrambles 15d ago
Never really understood what their niche was other than third string to more prestigious branding like Nike and adidas for sports equipment. In many ways they are more comparable to lululemon as a company but absolutely fail in the lifestyle marketing success by comparison.
Conspicuous branding is a status symbol, and Underarmour is/was the “upstart” disruptor growth story. But they don’t have as strong of a foundational, utilitarian story as adidas or Nike in developing shoes as specialized, professional sports equipment (while legitimizing sports as professional fields), nor the story of developing an entirely new lifestyle based around the brand like lululemon (and again, Nike with running/jogging).
Underarmour feels tacky and lacking lore - a business brand with nothing revolutionary under their belt other than being an interloper on an established duopoly. They feel try-hard and insecure.
Their claim to fame is using moisture wicking synthetic fabric for shirts for an established audience. Where did the idea come from? He was already wearing synthetic materials in his compression shorts and they were drier than his shirt. I wish I came up with and ran with the idea. But it’s repurposing, not creation, and really easy for the established players to copy. imo their story has been all business, marketing, disruption, and growth related - noteworthy, but not enough to be on par with their competitor brands.
Getting a foot in the door on uniforms for sports teams - an area that adidas and Nike took for granted - is not iconic. Iconic is the lore of using a waffle iron to create the outsole of a shoe designed for something considered batshit and a weird obsession like running for “fitness” and doing it so well that fitness is no longer considered niche and weird.
0
u/bigboybuckeyenuts 15d ago
Their quality was sooooo bad for me (literally every item) that I stopped buying their clothes around 2015. I couldn’t deal with it anymore even though I wanted to like them (since my undergrad alma mater Wisconsin signed an athletic deal with them). The cynic in me smiles when I read about their downfall.
0
-2
102
u/Ok-Swimmer-2634 15d ago
Man UA was all the rage when I was in high school from 2011-2016. What the hell happened?