Under Armour may put NYC flagship store on ice, restructure
BALTIMORE (AP) — Under Armour plunged in trading at the opening bell with the company anticipating a big financial hit from the viral outbreak in China and saying separately that it may need to restructure this year at a cost of hundreds of millions of dollars.
It also said Tuesday that it may scuttle the opening of its flagship store on Manhattan's 5th Avenue ans shares tumbled 16%.
The athletic gear company anticipates the virus outbreak in China will drag first-quarter sales down by $50 million to $60 million. It's also looking at pre-tax charges this year of between $325 million to $425 million related to restructuring. Included in those charges would be $225 million to $250 million related to the flagship store, which was slated to open in the famed former location of FAO Schwarz, another retailer that fell on hard times.
The Baltimore company swung to a loss of $15.3 million in the final quarter of 2019, or 3 cents per share. Its adjusted profit was 10 cents per share, meeting the expectations of analysts polled by Zacks Investment Research. But its revenue of $1.44 billion was just short of Wall Street projections.
Under Armour Inc. expects fiscal full-year revenue to be down at a low single-digit percent compared to a year ago. Earnings are forecast between 10 cents and 13 cents per share.
Under Armour had been an unparalleled success story in its early years and gone head-to-head with Nike, which had dominated the sports gear market for years.
After its founding by then 24-year-old Kevin Plank in 1996, Under Armour reported explosive numbers, including 26 straight quarters with sales growth of 20% or more.
In the final quarter of 2016, however, the Baltimore company caught investors off guard when it fell short of most sales projections and cut its expectations for growth the following year.
Under Armour also experienced executive upheaval, having three CFOs between 2016 and 2017.
Plank stepped down as CEO last year to become the company's executive chairman and brand chief. Patrik Frisk became only the company's second CEO since Plank founded the company almost a quarter of a century ago.
While Under Armour Inc. has landed major deals with Major League Baseball and star athletes like the NBA's Stephen Curry, it's come under pressure from threats like the growing popularity of athleisure wear, clothing that can be worn from work straight to the yoga studio.
"Ongoing demand challenges and the need to drive greater efficiencies in our business requires us to further prioritize our investments to put our company in the best position possible to achieve sustainable, profitable growth over the long-term," Frisk said in a prepared release Tuesday.
Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on UAA at https://www.zacks.com/ap/UAA