Despite Its First Quarterly Loss, Under Armour Stock Rises

Under Armour CEO Kevin Plank
Kevin Plank, shot exclusively for Footwear News.
Axel Dupeux

Kevin Plank, the outspoken founder of Under Armour, hates to lose.

But this morning, his Baltimore-based company posted its first quarterly loss since going public in 2005.

Under Armour said Thursday morning that it swung to a net loss of $2.3 million for the first quarter of 2017, a marked downturn from a $19.2 million profit in the same period last year.

Still, sales rose 7 percent, to $1.12 billion, driven by increases in its wholesale and direct-to-consumer businesses.

Footwear sales, in particular, rose 2 percent, to $270 million, due to “strength in basketball sales and the timing of liquidations,” the company said.

“Our first quarter results were in line with our expectations, and we’re off to a solid start in 2017,” said Plank in a statement. “By proactively managing our growth to deliver superior innovative product, continuing to strengthen our connection with consumers and increasing our focus on operational excellence — we have great confidence in our ability to drive toward our full-year targets.”

Despite the company’s first loss, shares were up more than 9 percent, because Wall Street had feared the results would be worse.

No doubt, the company is facing unusual obstacles this year, in addition to a weakening retail climate. Its chief financial officer, Chip Molloy, resigned in January, after Under Armour lowered its yearly forecast.

Not long after, Plank found himself in the crosshairs of a public backlash after he made comments that appeared to be an endorsement of President Donald Trump. It wasn’t just consumers who reacted, as many of the athletes Under Armour sponsors also spoke out.

The company was also criticized this year for its partnership with Kohl’s stores.

Despite Plank’s telling investors last year that the partnership would be an evolution for the brand and a way to reach more female consumers, analysts remained lukewarm to the idea. “Selling Kohl’s does little to enhance the Under Armour brand, especially when there’s the need to build a lifestyle business,” Susquehanna Financial LLLP analyst Sam Poser wrote in March.