Why Under Armour’s Stock Is Plummeting Double Digits

Shares for Under Armour Inc. are down by double-digit percentages in premarket trading after the sportswear giant posted disappointing fourth-quarter sales and noted a negative impact to its outlook as a result of the deadly coronavirus outbreak.

As of 8:45 a.m. ET on Tuesday, the firm’s stock was down more than 14% to $15.57. For the three-month period ended Dec. 31, adjusted earnings per share were in line with analysts’ expectations of 10 cents on losses of $15.3 million, compared with profits of $4.2 million a year ago. However, revenues came in lower than consensus bets of $1.47 billion, growing 4% to $1.44 billion.

Further, Under Armour issued softened guidance, forecasting a sales hit of roughly $50 million to $60 million in the first quarter due to the coronavirus. The death toll has already surpassed 1,000 in mainland China, where the illness originated, and has infected more than 43,000 around the world.

For the full year, the Baltimore-based company called for revenues to be down at a low single-digit percent compared with the prior year, reflecting a moderate to high single-digit percentage decline in North America. Under Armour has continued to experience deceleration in its home turf as it faces heavy competition from athletic rivals Nike and Adidas as well as heavily depending on wholesale partners that have seen challenges amid a changing retail environment.

“Under Armour is an operationally better company following our transformation over the past few years, with a clearly defined and focused strategy, enhanced go-to-market process, cleaner inventories and a stronger balance sheet,” President and CEO Patrik Frisk said in a statement. “However, ongoing demand challenges and the need to drive greater efficiencies in our business requires us to further prioritize our investments to put our company in the best position possible to achieve sustainable, profitable growth over the long-term.”

The firm is still in the midst of executing the five-year turnaround plan introduced at its investor day in December 2018, where it doubled down on its performance-first approach — a strategy that has put much of Wall Street on the fence. Early this year, Frisk took the reins from founder Kevin Plank, who now serves as executive chairman at Under Armour.

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