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Beleaguered US sportswear brand reports Q1 revenue decline of 22.5 per cent and warns of 50-60 per cent Q2 sales slump
Under Armour (UA) was already struggling before the Covid-19 crisis. The American sportswear brand has increasingly lost ground to its competitors Nike and Adidas and is currently under investigation by the SEC and Justice Department for its accounting practices.
In such an environment, the worst economic crisis of modern times and the near-complete shuttering of retailers under government edict could not have come at a worse time.
The company witnessed a 22.5 per cent fall in revenue in the first quarter of 2020, to $920.4m (£745.5m, €846.6m). Even Wall Street’s pessimistic predictions were outdone, with Under Armour reporting losses of 34 cents a share, rather than the 19 cents anticipated by analysts.
Responding to the results, CEO Patrik Frisk, who only took over from founder Kevin Plank in January 2020, stated: “During the first quarter, our results in January and February were tracking well to our plan. Since mid-March, as the pandemic accelerated dramatically in North America and EMEA and retail store closures ensued, we’ve experienced a significant decline in revenue across all markets.
“As we continue to navigate this crisis, our balance sheet remains well managed, and our leadership team is taking decisive actions to execute against our continued transformation.”
With such figures and the company warning that revenue could plunge by between 50 and 60 per cent, Under Armour’s share price has tumbled, falling 10.51 per cent in Monday trading to close at $8.00.
The company only went public four years ago and is a far cry from the $40.50 it first traded at. With closed shops, reorganisational costs, regulatory pressure and professional sports on ice, Under Armour is painfully feeling the Covid-19 pinch. A further indication of this can be found in its decision to delay payments to some of its athlete endorsers.
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