2:28 PM, Feb 11, 2019 — Under Armour (UAA) is believed to be losing North American market share to rivals Nike (NKE) and lululemon athletica (LULU), according to Canaccord Genuity, which is expecting Tuesday’s pre-market earnings report to be “lackluster”.
There’s a lack of compelling product or creative direction, while overall growth is “anemic” in North America, the largest market, analyst Camilo Lyon said in a note on Monday. Chief competitors including Nike, lululemon and Adidas “are outpacing UAA’s growth rate by a factor” of three to five times.
“It appears that UAA is still not ready to fully embrace the lifestyle trend (because it either can’t or just won’t) that consumers have been embracing,” Lyon said. “While we acknowledge the need for UAA to have a performance offering, the lack of a lifestyle point of view is disappointing and limiting.”
The sportswear company is poised to report fourth-quarter financials early Tuesday, with the consensus on Capital IQ for normalized earnings of $0.04 per share and revenue of $1.38 billion. A year ago, Under Armour said revenue was $1.4 billion and adjusted earnings were flat.
Under Armour “spoke vaguely” at its investor day about technologies that are being developed, but won’t come to market before 2020 and will not achieve scale before 2021, said Lyon, who has a sell rating on the stock and a price target of $13.
Under Armour “has to win in footwear” if it’s going to deliver on the long-term plan that it already laid out, Lyon said.
“Based on the company’s inconsistent performance in the category over the past 10 years, lack of visible innovation or new creative talent, and a surging product pipeline from Nike, we are skeptical the company can meet these growth targets.”
Companies: Under Armour, Inc.
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