Shares of Under Armour (UA, UAA) dropped in morning trading following comments made by retailer Dick’s Sporting Goods (DKS) on its quarterly earnings conference call.
SIGNIFICANT WEAKNESS IN UNDER ARMOUR BRAND: On its Q4 earnings conference call, Dick’s Sporting Goods Chief Executive Officer Edward Stack commented that strong apparel sales growth in Q4 came from adidas (ADDYY), CALIA and Patagonia, but was offset by “significant” weakness in the Under Armour brand as expanded distribution and a highly promotional environment impacted its sales. Stack said Dick’s was “pleased” with its apparel business excluding the impact from Under Armour. During a Q&A session with analysts, Stack said he sees some pressure going forward with Under Armour and believes the impact of the broadened distribution is going to continue to have an impact “until segmentation is done.” Commenting specifically on Under Armour’s business, Stack said he believes Under Armour CEO Kevin Plank and his team are “really focused on fixing the business.”
PRICE ACTION: Class A shares of Under Armour fell 2.3% to $16.80 in morning trading.