Under Armour sales growth in North America trails Nike again; shares sink

By Aishwarya Venugopal

By Aishwarya Venugopal

(Reuters) - Sportswear maker Under Armour Inc on Tuesday cut its full-year revenue forecast for North America as demand at its stores and online faced pressure from relentless competition from bigger rivals Nike and Adidas.

Shares of the company fell as much as 20% as it struggles to stand out in the United States, its biggest market, where it has been introducing products such as new Curry sneaker and HOVR shoes at a faster pace to shore up market share.

Under Armour has also been opening more company-owned stores and beefing up its online business, but the strategy failed to deliver in the quarter, with North America sales falling 3%. In contrast, Nike reported a 7% rise in sales from the region in the last reported quarter.

"With the sports apparel space becoming increasingly crowded, Under Armour needs to carve out a more distinct and edgy position," said Neil Saunders, managing director at research firm GlobalData.

Chief Operating Officer Patrik Frisk said in a post earnings call that while more customers visited its app and website, that did not translate into sales.

"In direct-to-consumer, we're experiencing softer than anticipated demand," Frisk said, adding that sales volume at its stores were also weak.

"There's a lot of work that we're putting into getting better from an e-commerce digital perspective."

Nike and Adidas have pumped money into its online businesses, which have been driving their strong results.

While online sales for Adidas grew 40% in the latest reported quarter, Under Armour's direct-to-consumer unit grew just 2% in the quarter.

The Baltimore-based firm said it now expected a slight decline in North America revenue for fiscal 2019 compared with a prior forecast of flat revenue.

However, it stuck to its overall growth target on higher demand for shoes and apparel abroad as higher spending in international markets powered growth in Europe and Asia Pacific.

The company's net loss narrowed to $17.3 million in the quarter ended June 30. Excluding certain items, Under Armour posted a loss of 3 cents per share, while analysts were expecting a loss of 5 cents.

Net revenue rose about 1% to $1.19 billion roughly in line with analysts' expectation.

Class A shares of the company have risen 55% so far this year and were trading at $23.69, down 13%.


(Reporting by Aishwarya Venugopal in Bengaluru; Editing by Arun Koyyur)