For the sportswear giant Under Armour, 2020 is off to a rocky start.
Shares in the company tumbled on Tuesday after it released disappointing earnings for 2019 and warned that this year may not be much better.
The company warned that overall revenues were likely to grow at a low single-digit rate in 2020, and that it expected further declines in North America, its biggest market. It also said its revenues in the first quarter — and potentially beyond — would take a hit of $50 million to $60 million because of the coronavirus outbreak in China.
Under Armour, which has already undergone waves of restructuring over the last two years to improve its profitability, also announced yet another potential plan that could result in a charge of $425 million. Roughly half of that would be related to giving up plans to open a flagship store in New York. (In the summer of 2016, Under Armour signed a lease to take over a 53,000-square-foot store on Fifth Avenue that was the former flagship for the toy store F.A.O. Schwarz.)
The weak earnings reflect the company’s continued struggles to attract consumers to its once-thriving brand. For 2019, the company’s revenues grew only 1 percent, to $5.3 billion.
Camilla Yanushevsky, an analyst at CFRA Research, called the North American outlook “abysmal” in a note to investors. She noted that Under Armour had “largely missed out in the athleisure trend and continues to lose share to the likes of Nike and Lululemon.”
Despite that criticism, Under Armour executives reiterated in a call with Wall Street analysts that the company remained focused on athletic-performance gear.
“There are those who believe our focus on athletic performance may currently be too narrow,” said Patrik Frisk, Under Armour’s chief executive. “We disagree. We see an even greater opportunity to drive harder towards our vision and mission. Of course, being in athletic performance requires us to make innovative, highly functional products, but it must also be great looking and on trend.”
In trading on Tuesday, the company’s stock slumped nearly 19 percent to close at $16.59, well off its high of more than $50 in 2015 amid 26 consecutive quarters of 20 percent or greater year-over-year revenue growth.
Various cost-cutting and restructuring moves over the last two years have improved profit margins at the company, which has also gained some control over issues involving inventory and expenses.
There has also been change in the company’s leadership. Last month, Kevin Plank, who founded Under Armour, stepped down as chief executive. Mr. Plank now holds the titles of executive chairman and brand chief, and Mr. Frisk reports directly to him.
Under Armour continues to fall short, however, in attracting consumers to its shoes and apparel. That is particularly true in North America, where revenues slipped 2 percent last year to $3.7 billion.
The Asia-Pacific region made up about 12 percent of Under Armour’s total sales in 2019 and has been one of its faster-growing markets. “Given the significant level of uncertainty with this dynamic and evolving situation, full-year results could be further materially impacted,” the company said.
Mr. Frisk said Under Armour, like other corporations, was monitoring the situation in China, which could affect its ability to obtain materials like trim and fabric from the region.
“With respect to factories, we are continuing to see closures and changing timelines of when they might reopen and trying to assess what it means for production fulfillment, capacity and the prioritization of which products to make,” Mr. Frisk added.
