Indeed, this premium athletic gear maker reduced its long-term growth rate expectations as the foundation of its business—athletic apparel, of course—while the market continues to feel continued pressure from bankruptcies across the sporting goods retail industry, as well as competition from various other manufacturers.
As such, the company in prepared remarks during its Tuesday morning earnings call, “While we expect to continue to significantly outpace the apparel industry, the growth rate going forward will be less than expected from our Investor Day in 2015.”
In addition, the company also said it expects to see operating growth to follow revenue growth within the next couple of years.
And with that that, the company’s volatile shares fell a notable 14 percent—to $32.60—in early morning trading. Adding this decline, then, the company has seen a drop of 31 percent in value over just the past year.
Accordingly, Under Armour founder and chief executive Kevin Planck assures “We are not saying we’re losing money; we are moving and marching forward.”
But is that really enough? After all, at $3.5 billion in North American sales, Under Armour is still much smaller than its core rivals like Nike (NKE) and Adidas (ADDYY), both down roughly 1.65 percent. And Nike and Adidas, combined generate in excess of $18 billion in revenue in this market; still, Plank is not discouraged. He says, “We have tremendous runway in our home market. We think we have opportunities to gain market share.”
Regaining market share is exactly what Adidas has been able to do over the last year. When you add Nike’s successful summer (thanks largely to the Rio Olympics) Under Armour has a big proverbial jump to make.
Plank goes on to say, “We want to be clear, our demand is still there. The demand for the Under Armour brand hasn’t disappeared, but it hasn’t reappeared dollar-for-dollar in our distribution.”
Moving forward, though, Under Armour now has new plans to respond to this slowdown by putting more focus on direct-to-consumer retail. This is a strategy that Under Armour’s bigger competitor, Nike, is also pursuing. Under Armour will also seek other places to sell footwear and apparel; they are currently considering Kohl’s.