Business

Under Armour still under siege in the US

Posted May 1, 2018 8:07 a.m. EDT

— Good news for Under Armour: Its star endorser Stephen Curry is expected to make his playoff debut Tuesday night after sitting out a few weeks with an injury.

But not even the Golden State Warriors sharpshooter may be enough to solve Under Armour's big problem - sagging sales in its own home market.

Under Armour is still struggling to compete with the two sneaker kings, Nike and Adidas, in the United States. On Tuesday, it reported that revenue in North America dropped slightly from a year ago.

Under Armour is doing extremely well in the rest of the world: Sales in Latin America were up 21% from last year. They soared 23% in Europe, the Middle East and Africa. And revenue from Asia surged 35% from the first quarter of 2017.

The problem is that the international strength isn't enough to to offset Under Armour's trouble in the United States. North America sales account for nearly three-quarters of its revenue. The North America unit also lost money last quarter.

CEO Kevin Plank said the results "demonstrate measured progress," and he stressed that the company continues "to build our global brand."

He added that Under Armour was confident it would meet its financial targets for all of 2018. But Wall Street isn't so sure.

Shares of Under Armour were among the worst performers in the S&P 500 the past two years, falling 30% in 2016 and 50% more last year. The stock has rebounded in 2018, but it fell 6% Tuesday as investors focused on the lack of a turnaround in the United States.

One problem for Under Armour is out of its control - the weakness at many specialty sporting goods retailers as Amazon and Walmart grow increasingly dominant.

Foot Locker and Dick's are struggling, and their stocks have plunged in the past year as a result. The Sports Authority, Gander Mountain and Sports Chalet have all gone bankrupt in the past two years.

Under Armour has tried to find new retail partners, such as Kohl's and DSW, and rely less on those struggling sporting goods chains.

Changes in the executive ranks may also be making investors nervous.

Co-founder Kip Fulks said in October he was taking a sabbatical. The company's footwear chief, its head of women's and kids apparel, and its chief marketing officer also announced they were leaving after the company reported weak third-quarter results.

Under Armour clearly needs to fix its many problems at home. And while Curry's looming return may give the Warriors a better chance of beating the upstart New Orleans Pelicans, it may not help Under Armour sell more shoes.