Shares of Under Armour (UA 5.22%) (UAA 5.65%) were down 16.1% as of 1:30 p.m. EST Tuesday, after the performance athletic apparel and footwear company announced mixed fourth-quarter 2019 results and disappointing forward guidance.
On the former, Under Armour's quarterly revenue grew 3.7% year over year to $1.44 billion, below estimates for $1.47 billion. That translated to a net loss under generally accepted accounting principles (GAAP) of $15 million, or $0.03 per share. However, adjusted for one-time tax items and an impairment charge related to its equity investment in its Japan licensee, Under Armour would have delivered earnings of $0.10 per share -- roughly in line with consensus estimates.
"Under Armour is an operationally better company following our transformation over the past few years, with a clearly defined and focused strategy, enhanced go-to-market process, cleaner inventories and a stronger balance sheet," said CEO Patrik Frisk in a press release. "However, ongoing demand challenges and the need to drive greater efficiencies in our business requires us to further prioritize our investments to put our company in the best position possible to achieve sustainable, profitable growth over the long-term."
In the meantime, Under Armour expects full-year 2020 revenue to decline by a percentage in the low single digits, which should translate to earnings of $0.10 per share to $0.13 per share (factoring in a headwind of $0.01 to $0.02 per share from the Japan licensee stake). By contrast, most analysts were modeling 2020 earnings of $0.47 per share on 5.3% revenue growth.
Under Armour added that its outlook includes a negative impact of roughly $50 million to $60 million from the coronavirus outbreak in China, though it still anticipates low-double-digit growth from its international business overall this year. North American sales, however, are expected to fall in the high-single-digit range, "as work continues to rebalance the business against market demand dynamics and pro-active strategies to better protect the company's premium brand positioning."
That's a tough pill to swallow for investors hoping to see this consumer discretionary company's core North American business return to growth in the near term. And Under Armour stock is responding in kind.