The North American Market Has Become The "Under Armour" Third Quarter Profit Slump "Culprit".

It's going through a horrible Halloween.

According to the world clothing and shoe net, in October 31st, the US sports brand announced its third quarter financial report in fiscal 2017, and sales fell 4.5% to 1 billion 410 million dollars over the three months ending September 30th, less than 1 billion 490 million dollars expected by Wall Street, creating the biggest decline in the revenue of Under Armour since its launch in 2005.

At the same time, profits fell from $128 million in the same period last year to $54 million, or 58%.

Following the second quarter, Under Armour lowered its annual forecast again, and its revenue growth was significantly reduced to single digits, down from 11% previously expected.

The company's share price fell by 19.7% to 11.83 dollars on the day of its earnings report, which has fallen by 44% this year, compared with the September 2015 high, which has dropped 75%.

"We are very disappointed with the performance in 2017," said Under Armour CEO Kevin Planck (Kevin Plank) at the investor conference on the day of the earnings announcement. "We failed to achieve the expected level."

According to the earnings report, a record drop in sales of Under Armour is due to a sharp decline in the North American market, which accounts for nearly 80% of total sales, as well as a slowdown in international business and high gross margins.

At present, the biggest problem of Under Armour still exists in North America.

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In the third quarter, revenues in the region decreased by 12% to $1 billion 70 million, of which the wholesale income in the North American market decreased by 13% to $880 million, and the revenue from direct sales increased by 15% to $468 million.

This means that the third party wholesale retailers are "dragging their feet" to a certain extent in the environment of continued weakness in the North American retail market.

It is worth noting that, according to the original plan, the latest product Curry 4 should be fully installed on the third party retailers in October 27th.

But to the latter's disappointment, the large sporting goods providers including Foot Locker and Dick s did not receive the goods on time, and the time of listing was postponed to November 18th.

This means they missed the best selling time for the product's heat.

"Retailers are unhappy," said analyst Sam Poser.

In this regard, Under Armour did not comment publicly, but it is foreseeable that it will follow the giant.

The pace of optimizing the retail channel of poor wholesalers will be the next important task for the US brand.

In addition, Under Armour has two big stars in the mainland, the golf Grand Slam winner Jordan Spiess and the warrior star Stephen curry, both of which once brought huge star flow to the brand.

But with the decline of Spiess's heat and Currie's two rule, the US brand has never increased its exciting new endorsement athletes, and the Star Marketing in North America has been stagnant.

Outside the domestic market, the share of international business revenue is only 20%, and the huge potential overseas market is regarded as an important factor in Under Armour turnover.

In the last quarter, sales in the EMEA region, including Europe, the Middle East and Africa, grew by 57% over the previous year, 89% in the Asia Pacific region and 10% in Latin America.

However, in the third quarter, international business growth slowed down, an increase of 34%, which was not enough to offset the weakness of the North American market.

In the first two quarters of 2017, the figure reached over 50%.

Due to the lack of bright eye products, the popularity of Under Armour has not been significantly improved due to the change in consumer fashion movement preferences.

In terms of gross margins, Under Armour fell 160 basis points to 46.2% in the third quarter, and is expected to fall 220 basis points this year.

Especially in the depressed North American retail environment, not only many sporting goods retailers who cooperate with Under Armour have declared bankruptcy, but Dick 's, Foot Locker and Hibbett are struggling, and the stock is expected to grow by 22% to 1 billion 200 million US dollars this year.

A series of product promotions will further pressure on gross margins and profitability.

In October this year, in order to focus on basketball and other key areas, Under Armour was announced to be withdrawing from some businesses. These products were skiing products, skiing, fishing tools, surfing equipment, fitness equipment, and larger market tennis. However, the news is still uncertain.

This business "downsizing" is the refinement of the overseas Under market and key categories in the restructuring plan of Under.

Business restructuring will accelerate as the bad report cards in the third quarter are released.

In the first quarter, Under Armour lowered its forecast for the fiscal year to reduce its annual operating profit from $320 million to $2.8 to $300 million, while revenue growth dropped to 9%-11%.

Now, the US brand has once again lowered its forecast, with the growth rate projected as "a low single digit percentage".

In the two quarter of this year, Under Armour predicted that the annual profit would reach 0 to 10 million dollars. In other words, the company did not rule out the possibility of making profits in the 2017 fiscal year.

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