- Facebook/Under Armour
- Under Armour slashed its outlook after it announced disappointing third-quarter earnings. GlobalData Retail’s managing director, Neil Saunders, says “the days of glory” are over for Under Armour. Still, Saunders says the company “is not so broken that it cannot be fixed.”
The company’s revenue fell 5% in the third quarter, to $1.4 billion. In North America, where Under Armour does 80% of its business, revenue fell 12%.
“While our international business continues to deliver against our ambition of building a global brand, operational challenges and lower demand in North America resulted in third-quarter revenue that was below our expectations,” CEO Kevin Plank said in a statement.
Neil Saunders, the managing director of the research firm GlobalData Retail, called the results “disastrous” in an analyst’s note.
Saunders says there are a few reasons for Under Armour’s decline in North America: It doesn’t have a deep connection with its customers, lost focus on its mission, expanded too fast into too many kinds of retailers, and still isn’t reaching women.
“The days of glory, when it would post double-digit uplifts in sales, are over,” Saunders said.
CNBC’s Jim Cramer said on Tuesday: “I think that this company has lost its way. The industry is much tougher.”
The lack of focus has led to Under Armour falling behind competitors like Nike and Lululemon, Saunders said.
“As it has expanded, Under Armour appears to have lost some of its brand essence, and its proposition and purpose have become confused,” he wrote. “Admittedly, communication in its own stores and online is better, but in third-party shops the focus is completely lost and, in some instances, Under Armour has become just another brand in a sea of brands.”
Still, Under Armour “is not so broken that it cannot be fixed,” Saunders said. But it could mean some pain in the near term.