As consumers spend more time at home, ditching work clothes and suits for yoga pants and sweats, one would think that sports apparel brand Under Armour (NYSE:UA) would be thriving.
But the company that urged athletes to “Fight on Together” has fallen on tough times. While the brand’s sweat-wicking performance gear is popular among athletes, it might not be resonating with consumers the way it used to.
Analysts say an athleisure boom is being fueled by a desire for comfort and a newfound interest in health and wellness. But consumers are also interested in style and fashion, which is why rivals like Nike (NYSE:NKE), Adidas and Lululemon (NASDAQ:LULU) are doing so well.
Last month, the company reported third-quarter wholesale revenue was flat at $1.4 billion and apparel revenue fell 6% to $927 million vs. $801 million consensus. Revenue from North America was down 5% to $963 million and international revenue fell off 18% to $433 million.
Gross margin decreased 40 bps Y/Y to 47.9% of sales vs. 46.0% consensus, driven primarily by negative impacts from COVID-19 related discounting and product mix partially offset by supply chain efficiencies and channel mix.
CEO Patrik Frisk said, “Our third-quarter results reflect considerably better than expected performance due to higher demand and our strong execution, especially in North America.
“We believe that the critical mass of our transformational challenges is behind us, and we remain sharply focused on operational improvements and financial discipline to accelerate strategies to create sustainable, long-term growth for the Under Armour brand and our shareholders.”
UA shares gained at Friday’s open, though, 27 cents, or 2.1%, to $12.88.