Under Armour reported another sales decline in its fiscal third quarter, an indication that the sportswear brand continued to lose its market share, according to an analyst.
The company’s revenue for the quarter ended December 31 fell 5 per cent to $1.33 billion, extending the previous 5 per cent drop in the second quarter.
While management said the results exceeded expectations, GlobalData MD Neil Saunders argued that the company had set the bar quite low.
The analyst said that the revenue came in well under the growth of the wider sportswear market.
“In other words, Under Armour continues to lose market share at a punchy rate and is doing so off the back of some severe deterioration in previous years. Indeed, compared to the same period in 2021, Under Armour’s revenue is down 13.1 per cent,” he said.
“Under Armour will argue that some of this step back is deliberately engineered as the brand tries to move away from excessive discounting and takes a more disciplined approach to ranging and product development. While we agree that these are sensible steps and concur that they have a material impact on the numbers, they do not provide the whole picture.”
According to the analyst, the brand appeared less often on holiday gift lists and in consumer considerations during the holiday, a consequence of years of murky, muddled positioning in the US.
While management has tried to address this, its efforts have not been strong enough, Saunders continued.
“The essential point that Under Armour has not yet grappled with is that, from a consumer perspective, it’s not just about individual product groups: It is about how these things come together to create a coherent narrative around the brand,” he said.
The fact that other labels like Gymshark and On are rapidly moving forward also added another layer of challenges, Saunders added.
The positive news is that many of the legacy issues that plague Under Armour in the US do not apply in Europe or Latin America, where the brand has developed differently and is more embryonic, he noted.
During the quarter, North America revenue slid 10 per cent to $757 million, while international revenue increased 3 per cent to $577 million. EMEA sales grew 6 per cent, Apac dropped 5 per cent, and Latin America soared 20 per cent.
On the bottom line, Under Armour posted an operating loss of $150 million, which it partly attributed to transformation and restructuring charges.
For the full year, the company expects revenue to decline approximately 4 per cent, compared with the prior outlook of a 4 to 5 per cent decrease.
