Shares of Under Armour Inc. slid as the company posted an unexpected decline in quarterly profit and issued a disappointing sales forecast for 2017 as the athletic gear maker said it struggled with its key North American business.
Shares dropped 27% premarket to $21.19.
For 2017, the company expects revenue to grow 11% to 12% to about $5.4 billion, sharply below the $6.06 billion analysts have predicted.
Under Armour also said its finance chief, Chip Molloy, has decided to leave the company for personal reasons. Effective Feb. 3, David Bergman, senior vice president of corporate finance, will serve as acting CFO. Mr. Molloy will remain with the company in an advisory capacity to assist with the transition.
Mr. Bergman, who has been with the company since 2005, is currently responsible for leading all major finance functions, including financial planning and analysis, treasury and tax. Previously, he was corporate controller and has held several senior management roles within the company's accounting and finance organization.
During the latest quarter, sales in North America, which make up more than 80% of the top line, grew 5.9%, while sales in the much smaller -- and lower-margin -- international business shot up 55%.
"Numerous challenges and disruptions in North American retail tempered our fourth-quarter results," said Chief Executive Kevin Plank.
In all for the December period, Under Armour reported a profit of $104.9 million, or 23 cents a share, down from $105.6 million, or 24 cents, a year earlier. Revenue grew 12% to $1.31 billion.
Analysts polled by Thomson Reuters had forecast earnings of 25 cents on $1.41 billion in revenue.
Gross margin fell to 44.8% compared with 48% last year, as better pricing was offset by aggressive efforts to manage inventory, changes in foreign currency, and the outperformance of the lower-margin footwear and international businesses.
Apparel sales rose 7.4% to $928.5 million for the quarter, with strength in golf and basketball. Footwear sales surged 36% to $227.7 million, on accelerated growth in running and basketball. Sales of accessories also grew 7.4%, to $104.3 million, lifted by bags and headwear.
Direct-to-consumer revenue jumped 23% to $518 million. The company launched three new e-commerce websites during the previous quarter.
Courtesy of MarketWatch