Under Armour is tanking after its earnings report.
The clothing company posted a net loss of $US12.3 million, or $US0.03 per share. That’s an improvement over last year, when the company announced a loss of $US0.12 per share.
Under Armour Class C shares are down 6.29% in early trading on Tuesday after releasing earnings before the bell. The company’s revenue rose 8.7% to $US1.09 billion, which is dramatically slower growth than Under Armour has been posting in recent quarters.
Increased competition from Nike and Adidas are hurting sales at Under Armour. The company is suffering from an identity crisis as it struggles to keep up with changing customer demands.
During the earnings release, Under Armour detailed its plan to restructure its business.
“As we stand up our category management structure within a consumer-led approach, we intend to meaningfully increase our go-to-market speed and amplify our digital capabilities,” CEO Kevin Plank said in an earnings release.
The company hopes to shift from a primarily US-based apparel company to a global apparel, footwear, and accessories brand.
However, not all investors are pessimistic about the stock despite its fall.
“We did not expect a great quarter, and what we got was a mixed bag,” Randal Konik, an analyst at Jefferies, said in a note to clients. “We see minimal downside from here and much more significant upside potential, esp. as compares ease and Curry 4, int’l growth kicks in.”
Konik set a price target of $US28.00, 63% higher than the current price of the stock.
“UAA is one of the few brands that matter in the athletic space. It has significant oppty to scale N.A., footwear, int’l, women’s, and lifestyle LT. With valuation compressed and overly-negative sentiment, we see a buying oppty with significant upside,” Konik said.