Americans are abandoning Under Armour for a simple reason

Under ArmourFacebook/Under ArmourUS customers don’t know what Under Armour stands for.

Under Armour is losing ground with US customers.

The sportswear company said Tuesday that its North American sales grew a meager 0.3% in the most recent quarter — a far cry from its long history of double-digit revenue growth.

The company is now cutting its full-year sales forecast due to weak demand in North America and said it’s “pivoting” to a new restructuring plan that will involve job cuts and facility closures.

Under Armour’s shares fell more than 7% in early-morning trading on Tuesday.

The company has been facing fierce competition from Nike and Adidas in the US. But that’s not all that’s pressuring Under Armour’s sales.

US customers are abandoning the brand because it lacks a clear identity, according to Anthony Riva, an analyst for the retail consulting firm GlobalData Retail.

“Our consumer data indicate that many people are increasingly uncertain of what Under Armour stands for, or which parts of the sports market it specialises in,” Riva wrote in a note to clients Tuesday. “This is partly a consequence of Under Armour wanting to ‘own’ many different segments of the sports performance category, but in a softer demand environment where consumers are more selective about what they buy, such a lack of focus is harmful.”

This is a troubling sign for Under Armour, which is reliant on North America for more than three-quarters of its revenue.

“A chilly performance here means the company as a whole has caught a cold,” Riva wrote.

Under Armour acknowledged this problem on Tuesday and said that its restructuring plan aims to turn the company “from US/mostly apparel centric to a global/apparel, footwear and accessories portfolio.”

The company also said it plans to pivot from a “product company” into a “consumer-led and category-managed brand.”

“We’ve identified a number of areas to enhance our operational capabilities, drive process improvement and gain greater efficiencies,” Under Armour CEO Kevin Plank said. “We remain steadfast in driving and building our brand while shifting our operational focus to become more return-on-investment and cost of capital centric — institutionalizing discipline to deliver more consistent, long-term shareholder value.”

Plank has previously acknowledged that it misread the trend of athleisure, instead relying on logos and basic styles of sportswear.

“We need to become more fashion,” Plank said during a call with analysts earlier this year. “The consumer wants it all. They want product that looks great, that wears great, that you can wear at night with a pair of jeans, but that also does perform for them.”

Overall, Under Armour’s revenue rose 8.7% in the most recent quarter to $US1.09 billion. The company also reported a net loss of $US12.3 million, compared with a loss of $US52.7 million a year earlier.

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