Shares of Under Armour Inc. (NYSE:UA)(NYSE:UAA) were down 10.4% around 2:30 p.m. EDT on Friday, having moved steadily lower during the trading day. Near the close at 4 p.m., they rebounded, but still traded down around 6.6%. Today's drop comes after gaining 4% on Thursday, following the company's second-quarter financial release and analyst call before market open.
Today's drop is a bit perplexing, particularly in light of yesterday's generally positive market reaction to the company's second-quarter earnings. That report included 8% sales growth and a pleasant surprise with sales in North America turning positive (up 2%) sooner than most analysts were expecting. Under Armour's bottom-line result, an adjusted loss of $0.08 per share, matched analyst estimates.
There were some concerning elements in Under Armour's press release, including its cash burn rate, and the fact that it reported an operating loss, even when adjusted for nonrecurring charges related to its ongoing restructuring plan. There's a good chance that today's market reaction was driven by some investors noting this concern. And there's the fact that management increased its estimates for how much it would need to spend on its restructuring by $80 million, after having already revised its restructuring costs higher earlier this year.
There was also the release of the University of Michigan's index of consumer sentiment survey, which indicates U.S. consumers are becoming concerned over the impact of potential tariffs on the economy. This helped drive sentiment lower from the June survey, even as the economy has seemingly accelerated.
The U.S. Commerce Department said on Friday that the economy grew at a 4.1% rate in the second quarter, the best period in four years. However, investors didn't respond favorably to this positive news. The S&P 500 finished trading down about 0.65%.
Add it all up, and today's down day for Under Armour was likely a confluence of several factors: concerns about tariffs even as GDP from the second quarter was reported as very strong; somewhat mixed quarterly results beyond the modest improvements on the top line; and potentially some profit-taking by traders who bought earlier this year. Before today's decline, Under Armour shares were up over 50% year to date.
For a closer look at what's going on with Under Armour, see our earnings coverage.