What's Happening?
Under Armour has announced that it expects its full-year revenue and profit to fall below Wall Street estimates. The sportswear company is facing challenges due to declining demand and increased costs associated with tariffs imposed by the Trump administration.
Founder Kevin Plank, who returned as CEO in March, is leading efforts to reset the business after a period of declining sales. The company also announced a change in its financial leadership, with CFO David Bergman stepping down to be replaced by Reza Taleghani, currently CFO of Samsonite. Under Armour's second-quarter revenue fell by 5% to $1.33 billion, slightly above expectations, while adjusted profit per share exceeded forecasts. However, the company's shares have dropped about 44% this year, with a further 2% decline in early trading.
Why It's Important?
The announcement highlights the ongoing struggles of Under Armour in navigating a challenging economic environment marked by tariff-related costs and cautious consumer spending. The company's reliance on Vietnamese manufacturing exposes it to significant tariff impacts, which are expected to add $100 million in costs this year. This situation underscores the broader impact of trade policies on U.S. businesses, particularly those with global supply chains. The leadership change at Under Armour may signal a strategic shift as the company seeks to stabilize and grow its market position. Investors and stakeholders will be closely watching how the company adapts to these challenges and whether new leadership can drive a successful turnaround.
What's Next?
Under Armour's future performance will depend on its ability to manage tariff-related costs and revitalize consumer demand. The company's revised forecast suggests a continued decline in revenue, with expectations of a 4% to 5% annual decrease. The new CFO, Reza Taleghani, will play a crucial role in steering the financial strategy during this period of transition. Stakeholders will be looking for signs of recovery and strategic initiatives that could help Under Armour regain its competitive edge in the sportswear market.
