Under Armour had an awful year. Will 2018 be better?

Under Armour has been under attack from Wall Street. The stock has lost more than half its value in 2017, making it t...

Posted: Dec 13, 2017 3:22 PM
Updated: Dec 13, 2017 3:22 PM

Under Armour has been under attack from Wall Street. The stock has lost more than half its value in 2017, making it the worst performer in the S&P 500. And this year's plunge follows a more than 30% drop in 2016.

It's a stunning fall from grace for the sneaker and athletic apparel company, which only a few years ago was enjoying strong momentum and making life difficult for giants Nike and Adidas.

But declining sales in the United States, disappointing sneaker launches, a wave of executive departures and a challenging retail environment have left Wall Street skeptical that Under Armour can turn things around anytime soon.

Simeon Siegel, an analyst with Nomura Instinet, argues that the company overextended itself in the past few years by entering too many new categories like tennis, fishing and golf instead of paying more attention to its key running and training segments.

"Under Armour likely grew too far, too fast," Siegel said. "It's fair to credit CEO Kevin Plank with some phenomenal growth. But Under Armour needs to cut ancillary products, pull back and focus on the core business."

Under Armour has also made a big push into basketball with a line of shoes endorsed by Golden State Warriors star Steph Curry. But it may have tried too hard to market Curry as a worthy successor to Michael Jordan, who still is a big seller of sneakers for Nike.

The problem, analysts say, is that the Curry sneakers are great for playing basketball but are not fashion lifestyle shoes the way Air Jordans were in the 1980s and 1990s during the peak of Jordan's NBA career.

Related: Under Armour is in serious trouble

Even Curry's teammate Kevin Durant, who has a shoe line for Nike, has made fun of them.

Making matters worse, Curry debuted the latest iteration, the Curry 4, during the NBA Finals in June. But the sneaker wasn't available in stores until October.

"Under Armour was too late with the Curry 4 launch," said Susquehanna Financial Group analyst Sam Poser. "Not having the shoes out when they were top of mind was a mistake. The timing was so messed up."

Under Armour also suffered from bad PR earlier this year that may have hurt its reputation with younger customers (and athlete endorsers) after Plank agreed to join President Trump's now defunct manufacturing council.

Plank said in an interview with CNBC that "a pro-business president is something that is a real asset for the country." Curry responded by telling The Mercury News that he agreed with Plank -- but only "if you remove the 'et' from asset."

Related: Why Under Armour's CEO had to ditch Trump

Lance Allega, Under Armour's vice president of investor relations, spoke with CNNMoney and highlighted that the company will "evolve into an operationally excellent company with financial discipline."

Allega added that the company will be more innovative and "laser-focused" on how it brings new products to market.

"We already are a great brand. We need to become a great company," he said.

Allega is one of several new executives at Under Armour. He joined in January from The North Face and Vans owner VF Corp, and also has worked at Nike.

But there have been several other changes in the leadership ranks this year that may also be making Wall Street skittish.

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

The dramatic shakeup in the world of retail is obviously hurting the company, too.

Related: Air ball! Nobody's buying expensive sneakers

Sporting goods giants Foot Locker and Dick's are struggling and their stocks have both plunged as a result. Cabela's was sold to Bass Pro Shop. The Sports Authority, Gander Mountain and Sports Chalet have all gone bankrupt in the past two years.

That's one reason why Under Armour has tried to find new retail partners, such as Kohl's and DSW, in order to lessen its reliance on struggling sporting goods chains.

However, it's also worth noting that Under Armour's rivals aren't suffering as much from the problems in retail.

Adidas continues to thrive. Nike, the worst performing Dow stock in 2016, has enjoyed a renaissance this year, with shares rising nearly 25%. Skechers has rebounded from a rough 2016, too.

Victor Ahluwalia, an analyst with CFRA Research, said he's concerned that Under Armour will have no choice but to slash prices to win back customers. And that could further hurt profit margins.

Ahluwalia said he noticed bigger markdowns on Under Armour products over the Black Friday shopping weekend than there were for Nike.

Related: Slam dunk for Adidas as sales top Nike's Jordan line

He said it is encouraging to see Under Armour's international business growing rapidly, but sales from outside the U.S. are not yet big enough to move the needle for the whole company.

Still, Ahluwalia recently upgraded the stock. The reason? If Under Armour doesn't turn things around soon, there could be calls for the company to get taken over.

"Under Armour could go private or be sold to another company. That will keep a floor on the stock price. But 2018 will still be a tough year," Ahluwalia said.

Lafayette
Cloudy
29° wxIcon
Hi: 28° Lo: 25°
Feels Like: 19°
Kokomo
Cloudy
28° wxIcon
Hi: 28° Lo: 25°
Feels Like: 18°
Rensselaer
Mostly Cloudy
27° wxIcon
Hi: 29° Lo: 23°
Feels Like: 19°
Lafayette
Cloudy
29° wxIcon
Hi: 28° Lo: 25°
Feels Like: 19°
Danville
Cloudy
27° wxIcon
Hi: 29° Lo: 26°
Feels Like: 27°
Frankfort
Cloudy
25° wxIcon
Hi: 28° Lo: 26°
Feels Like: 15°
Frankfort
Cloudy
25° wxIcon
Hi: 27° Lo: 26°
Feels Like: 13°
Monticello
Cloudy
25° wxIcon
Hi: 28° Lo: 24°
Feels Like: 16°
Monticello
Mostly Cloudy
25° wxIcon
Hi: 28° Lo: 23°
Feels Like: 16°
Logansport
Cloudy
27° wxIcon
Hi: 27° Lo: 25°
Feels Like: 19°
Some snow Wednesday to Wednesday night.....
WLFI Radar
WLFI Temps
WLFI Planner

Indiana Coronavirus Cases

Data is updated nightly.

Cases: 614946

Reported Deaths: 9807
CountyCasesDeaths
Marion849231342
Lake45784693
Allen33103560
Hamilton29752316
St. Joseph27572383
Elkhart24496346
Vanderburgh19679255
Tippecanoe18150144
Johnson15234296
Porter14970172
Hendricks14550253
Madison11071223
Clark10852145
Vigo10819185
Monroe9496115
Delaware9193136
LaPorte9173164
Howard8325148
Kosciusko811485
Warrick683399
Hancock6783106
Bartholomew6659100
Floyd6522113
Wayne6194164
Grant6050118
Dubois559081
Boone557968
Morgan551996
Henry512365
Marshall507884
Dearborn488745
Cass487864
Noble476159
Jackson428747
Shelby423381
Lawrence395180
Clinton375845
Gibson375560
Harrison354046
DeKalb351365
Montgomery349754
Knox337839
Miami325244
Steuben315846
Whitley313126
Wabash306951
Adams303636
Ripley301646
Putnam299152
Huntington295760
Jasper293035
White275943
Daviess271776
Jefferson267738
Decatur249983
Fayette249949
Greene242763
Posey241828
Wells237551
LaGrange230363
Scott227939
Clay225032
Randolph215848
Jennings200937
Spencer193622
Sullivan193633
Washington189023
Fountain185227
Starke177044
Jay168723
Owen168338
Fulton165430
Orange161035
Carroll160616
Rush156418
Perry156129
Vermillion150034
Franklin149933
Tipton134433
Parke13098
Pike118826
Blackford112023
Pulaski97937
Newton92621
Brown88835
Benton87110
Crawford8099
Martin75013
Warren6867
Switzerland6695
Union6297
Ohio4967
Unassigned0375

COVID-19 Important links and resources

As the spread of COVID-19, or as it's more commonly known as the coronavirus continues, this page will serve as your one-stop for the resources you need to stay informed and to keep you and your family safe. CLICK HERE

Closings related to the prevention of the COVID-19 can be found on our Closings page.

Community Events