What happened

Under Armour Inc. (NYSE:UA)(NYSE:UAA) reported its fiscal third-quarter results before market open on Oct. 31, and its share prices immediately took a hit once trading opened. As of 12:17 p.m. EDT, the company's class A shares (UAA) are down 17.9%, while its class C shares (UA) are down 15.4%.

But it's not just the company's poor earnings result, which included a surprising 5% decline in sales, that's pushing shares down so hard today. Bank of America's investment banking unit downgraded Under Armour stock to "underperform," with a cut in the price target to $12; analysts cited concerns such as tougher competition and a more difficult environment in North America right now.

Unfortunately, there's more. And this is probably the biggest "bad news," because it's very material: Under Armour slashed its full-year guidance, from expectations of 9% to 11% sales growth after the second quarter, to a "low single-digit percentage rate" after its third-quarter results were in.

Man wearing t-shirt with the Under Armour logo and CHINA written on it

Image source: Under Armour.

So what

Under Armour continues to struggle with weak sales in North America. The company said revenue in its biggest segment fell 12% in the third quarter, primarily due to a 13% decline in wholesale revenue, which was partially offset by a 15% increase in direct-to-consumer sales (which is about half the size of the wholesale business).

It wasn't just revenue that took a hit in the quarter. Weaker demand and some product missteps, along with heightened competition, took a bite out of profitability, too. Gross margin percentage fell from 47.5% last year to 45.9% in the just-ended quarter. The company also said it continues to struggle with the implementation of a new enterprise resource planning system, and that's both costing it sales and increasing expenses.

There was some good news, however. Under Armour reported $62 million in operating income, even after taking $85 million in restructuring and impairment charges related to the restructuring plan announced last quarter. The company also continues to drive strong international growth, with sales up 22% in EMEA (Europe, the Middle East, and Africa), 52% in Asia-Pacific, and 33% in Latin America.

Now what

There's little doubt that Under Armour continues to struggle with heightened competition in North America, and has yet to return to the high level of execution seen in the past. But at this stage, it's worth a reminder that the company is barely one quarter into its restructuring plan, and it will take some time to turn the ship.

But at the same time, investors should be very wary because the company cut its full-year guidance again, and expects overall sales in 2017 to be nearly flat -- even though many expect a strong holiday shopping season that will include the launch of the Curry 4 basketball shoe in mid-November.

For the past few years it hasn't been easy owning Under Armour shares; they're now down more than 72% from their all-time high. Add in that Wall Street analysts are starting to say "sell" and the company is cutting its own forecast, and now may seem like a scary time to hold. But while the company is indeed struggling to turn around its core North American business, it continues to deliver strong international growth, while growing its domestic direct-to-consumer business at double-digit rates.

Will the company be able to turn North America around? It could be a mistake to bet against founder and CEO Kevin Plank and his team, if they're given a little time to regroup and refocus the company on its mission. But it may take a few more quarters to get a better idea of how things are working out.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.