Americans, it seems, are under Under Armour.
The onetime darling of the athletic wear industry on Tuesday announced that sales are down for the first time since 2005, even as it makes an aggressive push to expand into mainstream chains like DSW, Kohls, and Famous Footwear. The news sent shares of the company’s stock tumbling nearly 19 percent Tuesday.
“This is an abrupt about-turn for a company that, until recently, was on a mission to challenge the might of Nike,” Neil Saunders, managing director of the analytical firm GlobalData Retail, said in an email. “Under Armour has become just another brand in a sea of brands.”
The problems are multiple, he said. Although Under Armour racks up billions of dollars in sales each year, analysts say it has failed to drum up much loyalty among its customers. It has also been slow to resonate with women and has struggled to compete with larger rivals such as Nike and Adidas, which often offer lower-priced goods. Another factor: Bankruptcy filings by key retail distributors such as Sports Authority and Sports Chalet.
“Kind of a perfect storm,” Patrik Frisk, the company’s president and chief operating officer, said in a Tuesday morning call with analysts. “Both internal and external factors are hitting us really hard.”
North American sales at the Baltimore-based company slumped 12 percent in the most recent quarter amid slowing demand and mounting competition. Overall, sales fell 4.5 percent during that period, marking the company’s first quarterly sales drop since going public in 2005. Profits, meanwhile, fell 58 percent to $54 million, or 12 cents per share, from $128 million, or 29 cents per share, a year earlier.
The company said it expects its financial struggles to continue, and lowered its forecast for the rest of the year.