Wall Street’s worried Under Armour Inc. is running out of steam.
Shares of the activewear maker plummeted 25 percent to $18.80 in the early minutes of trading after the firm reported its weakest first quarterly sales gain since the depths of the financial crisis. The decline left the company with a market capitalization of $8.7 billion.
Sales for the three months ended Dec. 31 rose 11.7 percent to $1.31 billion from $1.17 billion. Net income for the quarter dipped 0.7 percent to $104.9 million, or 23 cents a diluted share, from $105.6 million, or 24 cents a share.
For the full year, sales rose 17.7 percent to $2.24 billion, driving profits up 11.6 percent to $248.7 million.
Kevin Plank, chairman and chief executive officer, did his best to project strength in the face of the slowdown.
“We are incredibly proud that in 2016, we once again posted record revenue and earnings, however, numerous challenges and disruptions in North American retail tempered our fourth-quarter results,” Plank said. “The strength of our brand, an unparalleled connection with our consumers and the continuation of investments in our fastest growing businesses — footwear, international and direct-to-consumer — give us great confidence in our ability to navigate the current retail environment, execute against our long-term growth strategy and create value to our shareholders.”
But Under Armour expects 2017 to bring more of the same.
Net revenues are expected to grow by 11 to 12 percent, to nearly $5.4 billion. The company said gross margins would be “slightly down” with “benefits in product costs being offset by continued pressure from changes in foreign currency and sales mix, as the footwear and international businesses continue to outpace the growth of the higher margin apparel and North American businesses.”
Under Armour also said its chief financial officer, Chip Malloy, decided to leave the company “due to personal reasons” and that David Bergman, senior vice president of corporate finance, would serve as acting cfo.
There are plenty of companies showing more weakness than Under Armour, including department stores such as Macy’s Inc., which is closing stores and rejiggering its operations. But Under Armour was one of the few fashion stocks still headed up its growth curve, making the slowdown all the more troublesome to investors.