Under Armour Inc Class A (NYSE:UAA) just reported underwhelming quarterly figures from its North American market due to low sales from the region and heavy competition.
The athletics apparel firm reported that its sales in North America dropped by more than 3% in Q2 2019 compared to its Q2 figures in the previous year. The poor performance also influenced the company to revise its revenue projection for the entire year 2019 and the new expectations are that the sales will decline slightly.
Under Armour’s recently released figures reflect its struggle to gain traction in the North American market over the past few years. It has also struggled to keep up with strong rivals such as Nike Inc (NYSE: NKE) and ADIDAS AG/S ADR (OTCMKTS: ADDYY) among others. Poor sales have also forced the company to roll out promotions through which it disposes merchandise at heavily discounted prices which subsequently affects profits.
Under Armour’s international performance remains strong
Although Under Armour had a weak performance in the North American market, it claims that its international business remains strong. This claim is backed up by strong sales data which grew by 12% in Q2. Unfortunately, the weak performance in its home market did not settle well with investors. The company’s shares dropped by 17% when the markets opened on Wednesday.
Investors have also been pressuring the company due to its declining performance over the past few years. This performance has prevailed despite a long-term plan to boost its brand image. Nevertheless, Under Armour is still committed to providing high-quality sports apparel.
Under Armour’s COO, Patrik Frisk revealed that direct-to-consumer sales were one of the sectors where the company was not doing well in the North American market. The company has 181 stores distributed across the region but those stores saw a declining number of shoppers during Q2 2019.
Some areas achieved positive growth. For example, the company reported improving footwear sales courtesy of products such as Hovr sneakers. The company’s premium wholesale business also performed better than anticipated but unfortunately this was not enough to cushion from the declines.