Under Armour share price tanks

SPORTSWEAR giant Under Armour is in big trouble. Sales are falling, execs are leaving and its market value has lost nearly $4 billion in one day.

Israel Folau wearing Under Armour clothing.

UNDER Armour shares plunged as much as 27 per cent Tuesday morning as its disappointing results spurred Wall Street analysts to warn that rough times are ahead for the athleticwear industry.

The Baltimore-based sportswear maker reported lower-than-expected quarterly profit and revenue, hurt by stiff competition and slowing growth in North America, and also forecast 2017 sales well below analysts’ estimates.

Under Armour said Chip Molloy, its chief financial officer for about a year, will step down for personal reasons. Senior vice president David Bergman will be acting CFO from February 3.

Net sales in North America rose 5.9 per cent in the quarter, but that was well below the quarterly average growth of about 24 per cent it has reported since 2013.

The company has been facing intense competition from No. 1 US sportswear maker Nike, which has cut prices on some products to match Under Armour’s.

Also, Germany’s Adidas doubled its share of the US athletic footwear market to 9 per cent in the third quarter compared with a year earlier, according to market research firm NPD.

“With Under Armour stepping up promotions ... its major clients Foot Locker and Finish Line citing a tough retail environment, and cautious orders from sports retailers, the sportswear maker is in for a tough year ahead,” UBS analyst Michael Binetti wrote in a pre-earnings note.

Under Armour shares were down 24 per cent at 10am New York time, putting them on track to open at a near-three-year low and wipe out roughly $US3 billion ($3.96 billion) in market value. The stock has slumped 39 per cent over the past year.

The company’s shares were a drag on Nike’s stock as well, which was down 2 per cent.

The company forecast 2017 revenue to rise 11 to 12 per cent to nearly $US5.4 billion ($7.13 billion). Analysts on average expected $US6.05 billion ($7.99 billion), according to Thomson Reuters.

Revenue for the fourth quarter ended December 31 rose about 12 per cent to $US1.31 billion ($1.73 billion) — the slowest growth in eight years. Analysts on average expected $US1.41 billion ($1.86 billion).

Net income fell to $US104.9 million ($138.6 million) from $US105.6 million ($139.5 million) a year earlier.

This article originally appeared on New York Post and was reproduced with permission.