Did China Put the Last Nail in Under Armour’s Coffin?
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What’s interesting about Under Armour is that its share price has dropped by 50% over the past 6 months
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1Q22 Earnings results were disappointing
Investors lower profit outlook and punish share price
- Within 1 day, UA’s share price plummeted by 25%
- At about US$10 it is now 53% below its 12-month high
- What sparked the fall?
- Under Armour reported an unexpected quarterly loss of US$60m
Under Armour has been involved in several scandals
Strategy shift under new CEO hampered by external shocks
Long way to close gap with competitors
- Under Armour still hasn’t gotten its SG&A under control, and it continues to be a drag on operating margin
- SG&A has been consistently over 40% of revenue
- UA’s restructuring plan has not yet borne fruit
How did consensus assess Under Armour before earnings results?
- Analysts were equally divided between BUY and HOLD
- In the past few months, analysts constantly reduced their price targets
- Further downward adjustments are likely after the latest earnings results announcement
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