{"id":50035,"date":"2017-11-01T06:06:19","date_gmt":"2017-11-01T06:06:19","guid":{"rendered":"https:\/\/www.biphoo.com\/bipnews\/?p=50035"},"modified":"2017-11-01T06:06:19","modified_gmt":"2017-11-01T06:06:19","slug":"under-armour-chops-forecasts-as-north-america-slide-worsens","status":"publish","type":"post","link":"https:\/\/www.biphoo.com\/bipnews\/business\/under-armour-chops-forecasts-as-north-america-slide-worsens.html","title":{"rendered":"Under Armour chops forecasts as North America slide worsens"},"content":{"rendered":"

Under Armour chops forecasts as North America slide worsens<\/span><\/strong><\/span><\/h2>\n

Under Armour chops forecasts as North America slide worsens: Shares of the maker of Stephen Curry basketball sneakers, already among the worst performing stocks on the S&P 500 .SPX this year, sank 17 percent in morning trade in New York, hitting a four-and-a-half year low.<\/span><\/p>\n

The results also worsened sentiment in other sportswear firms, pulling Nike shares 1.5 percent lower and weakening retail chains including Dick\u2019s Sporting (DKS.N), Finish Line (FINL.O) and Hibbet (HIBB.O), which all sell Under Armour gear.<\/span><\/p>\n

Chief Executive Kevin Plank on a call with analysts blamed sporting good retailer bankruptcies and store closures, declining traffic to brick-and-mortar chains and shifting fashion preferences in North America for its underperformance.<\/span><\/p>\n

\u201cWe are incredibly disappointed with our 2017 performance,\u201d Plank said on a post-earnings call.<\/span><\/p>\n

The pressure that drove the Baltimore-based firm to announce a restructuring program in August – for which it took an $85 million charge in the quarter – was written large across the results, with North American wholesale revenue down 12 percent.<\/span><\/p>\n

One big headache is declining demand and a waning trend for athleisure fashion, where customers wear exercise clothing in day-to-day life, in which Under Armour has been trying to specialize.<\/span><\/p>\n

A growing retail price war and Adidas\u2019s resurgence in North America, where it has won back customers by bringing back and remarketing its retro line of shoes, has exacerbated the company\u2019s problems.<\/span><\/p>\n

\u201cThis is now about more than external factors,\u201d Neil Saunders, managing director of research house GlobalData Retail, wrote in a note on the company\u2019s results.<\/span><\/p>\n

\u201cIt demonstrates issues with the (Under Armour) brand and its proposition. Especially so since other brands and retailers… have not posted such calamitous figures.\u201d<\/span><\/p>\n

Its restructuring plan sought to cut white-collar jobs, close some stores and reduce its focus on lower revenue sports including tennis and fishing, while focusing more on women\u2019s sportswear apparel.<\/span><\/p>\n

FURTHER WEAKNESS<\/span><\/p>\n

On the call with analysts, Plank said he expected weakness in its North American wholesale business to continue \u201cwell into the next year.\u201d<\/span><\/p>\n

The company cut its forecast for a percentage rise in full-year revenue to the low single-digits from 9-11 percent earlier. It also cut its full-year adjusted earnings forecast to 18 to 20 cents per share, compared to a previous 37 to 40 cents.<\/span><\/p>\n

Revenue overall fell 4.5 percent year-on-year in the quarter ended Sept. 30, its first such decline since going public in 2005. The company also blamed the upgrading of its IT systems to SAP for the drop in sales, saying it led to shipment delays.<\/span><\/p>\n

\u201cThis is a key factor impacting our fourth quarter and full year outlook,\u201d President Patrik Frisk told the earnings call.<\/span><\/p>\n

Under Armour\u2019s shares still carry the highest valuation of the big global sportswear companies with its stock trading at 39.1 times forward earnings. Nike in contrast trades at 22.4 times, and Adidas at 24.7 times.<\/span><\/p>\n

Net income more than halved in the quarter to $54.2 million, or 12 cents per Class C share, mainly due to the restructuring charge. Excluding items, the company earned 22 cents per share, topping an already downbeat analysts\u2019 consensus by three cents, according to Thomson Reuters I\/B\/E\/S.<\/span><\/p>\n

Source:http:\/\/www.reuters.com\/article\/us-under-armour-results\/under-armour-chops-forecasts-as-north-america-slide-worsens-idUSKBN1D01ED<\/span><\/p>\n

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