- Under Armour slashed its outlook after disappointing third-quarter earnings.
- This has GlobalData Retail’s managing director, Neil Saunders, proclaiming that “the days of glory” are over for Under Armour.
- Still, Saunders says that the company is “not so broken that it cannot be fixed.”
Under Armour just announced its third-quarter earnings, confirming what analysts have been saying: it’s not out of the woods yet.
The company saw revenues fall 5% in the third quarter to $US1.4 billion. In North America, the region where Under Armour still does 80% of its business, revenues 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 research firm GlobalData, called the results “disastrous” in an analyst’s note. Saunders points to a few reasons for Under Armour’s decline in North America. It doesn’t have as deep a connection with its customers, it lost focus on its main mission, it expanded too fast into too many different kinds of retailers, and it still isn’t reaching female consumers.
All that adds up to Saunders making a proclamation: “The days of glory, when it would post double-digit uplifts in sales, are over.”
The lack of focus has led to Under Armour falling behind competitors like Nike and Lululemon.
“As it has expanded, Under Armour appears to have lost some of its brand essence, and its proposition and purpose have become confused. 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,” Saunders writes.
Still, Under Armour “is not so broken that it cannot be fixed,” according to Saunders. But, it will mean some pain in the near term.
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