Summary
- Under Armour, Inc., a sportswear company, has experienced a downturn in sales, particularly in North America, but international sales have shown growth.
- The company has reduced inventory and improved margins, and its balance sheet remains solid.
- Under Armour has announced a restructuring plan to address the decline in North American sales, which may pressure the top and bottom line in the near-term. However, if management executes the plan successfully, the stock could see a gradual improvement in performance.
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Make no mistake, it has been a tough environment for retailers. You have soaring housing costs. Food is expensive. Gas is expensive. Credit card and other borrowing rates are so high. Student loans are being repaid once again, also biting into the consumer’s spending power. While consumer sentiment still remains higher than we would expect with all of this going on, there has been real pressure on many restaurant and retail stocks. Sure, there is a lot of variability within the space, with some notable winners, but many are under pressure.
One name that was once a Wall Street darling that has fallen onto hard times over the last year or so is Under Armour, Inc. (NYSE:UA, NYSE:UAA). After the just-reported fiscal Q4 earnings that came with the announcement of a restructuring plan, we think it is time to consider a speculative bet on a successful turnaround.
Who is Under Armour?
Under Armour is an American sportswear company that manufactures footwear and apparel. They make a lot of apparel that you see many who live an active lifestyle wear. They also have deals and sponsorships with many professional athletes. If you have ever owned any of the clothing, Under Armour is best known for its moisture-wicking apparel, which is designed to help athletes stay cool and dry during workouts. But they have hats, and hoodies, sneakers, and much more. While the company has experienced a palpable downtrend, and it has been forced to be extremely promotional to move merchandise, we think it is undergoing a major reset. Let us discuss.
