Under Armour Q4 - Lowering Guidance

Under Armour, the American sports & apparel company and a competitor to Nike and Adidas, reported its holiday earnings. They were underwhelming for Mr. Market, as the company battles ongoing competition in their athletic apparel and sneaker department. The big issue is that the company had to lower its guidance by $60 million, citing the Coronavirus as a potential threat.

Revenues for the quarter were up slightly to $1.44 billion from $1.39 billion. The bad news is that the net losses went from $4.2 million a year ago to $15.3 million. Obviously, the share price tends to follow operations in the long-term. Currently the Under Armour stock is at $15, down about 16% year on year, far from its $51 highs back in 2015.

Under Armour's share price performance over the past five year period has been dismal. Especially when compared to peers in the apparel market, who have seen double-digit compound growth in the same period. The brand's momentum has been on a downtrend since Adidas's North American dominance in apparel.

Kevin Plank started Under Armour in 1996 in his grandma's basement with a goal to create workout and performance wear, to be better than cotton T-shirts. His first prototype was a sweat-wicking compression shirt. In the past couple of years, the company has gone further than activewear as it has added products such as MapMyFitness & MyFitnessPal to its product portfolio.

Today their apps are dead, leaving Strava to shine in that space. The sweat-wicking technology lives on through brands like Dri-Fit. If the company had to go 'under' (which is not probable at this point) at least its legacy will live on, thanks to Kevin Plank's genius. Hopefully it finds its next big thing very soon. We're very pleased to say we got out of this one just in time and bought more Nike with the proceeds.