What Happened?
Shares of athletic apparel company Under Armour (NYSE: UAA) fell 22.4% in the morning session after the company reported second-quarter results and issued a significantly weaker-than-expected outlook for the third quarter. The sportswear maker's revenue for the second quarter came in at $1.13 billion, which met Wall Street's expectations but represented a 4.2% decline year-over-year. However, its adjusted earnings per share of $0.02 missed consensus estimates. The main concern for investors was the bleak guidance for the upcoming quarter. Under Armour projected third-quarter revenue of $1.31 billion, falling 4.1% short of analyst forecasts. More dramatically, the company guided for adjusted earnings per share of just $0.02 at the midpoint, a stark contrast to the consensus estimate of $0.26.
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What Is The Market Telling Us
Under Armour’s shares are very volatile and have had 20 moves greater than 5% over the last year. But moves this big are rare even for Under Armour and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 10 days ago when the stock dropped 3.8% as the latest U.S. consumer confidence report revealed underlying weakness despite a headline increase, raising concerns about future spending. While the Conference Board's headline Consumer Confidence Index rose to 97.2 in July, the details painted a more cautious picture for investors. The Present Situation Index, a measure of consumers' assessment of current business and labor market conditions, actually fell. More telling for the sector, the report showed a decline in buying intentions for major discretionary items such as homes, cars, and most appliances. This combination of factors signals potential weakness in future consumer spending, casting a shadow over companies that rely on non-essential purchases.
Under Armour is down 36.1% since the beginning of the year, and at $5.18 per share, it is trading 53.5% below its 52-week high of $11.13 from November 2024. Investors who bought $1,000 worth of Under Armour’s shares 5 years ago would now be looking at an investment worth $483.19.
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