Under Armour Guides Lower, Stock Hits 52-Week Low And Recovers

Shares of Under Armour Inc UAA fell more than 13 percent early Tuesday morning, despite a top and bottom-line beat in its second-quarter earnings report.

The athletic apparel maker said it lost 3 cents per share in the second quarter on revenue of $1.09 billion. Wall Street analysts were expecting the company to lose 6 cents per share on revenue of $1.08 billion.

"Our second quarter performance validates the strength of our multiple growth levers to deliver solid results in today's dynamic global environment," said Under Armour Chairman and CEO Kevin Plank. "More than doubling our business over the last three years has required significant investments and resources to build our brand. We are utilizing 2017 to ensure that operations across our diverse portfolio of sport categories, distribution channels and geographies are optimized as we are building a stronger, faster and smarter company."

What Went Wrong?

Under Armour cited a "dynamic and promotional retail environment" in North America which tempered results as revenue for the quarter was flat from a year ago. Outside of North America, the company did see continuation of strong growth as revenue rose 57 percent.

Gross margin fell 190 basis points in the quarter to 45.8 percent due to poor inventory management initiatives, changes in foreign currency, and higher air freight costs.

Under Armour guided its full year fiscal 2017 earnings per share to a range of 37-40 cents, which is short of the 43 cents per share Wall Street analysts were expecting.

Finally, Under Armour announced a restructuring plan to "more closely align its financial resources to support the company's efforts to better serve the evolving needs of the changing consumer and customer landscape." As a result, the company will incur a pre tax-restructuring and related charges of around $110 to $130 million in fiscal 2017.

Despite hitting a 52-week low of $18.29 in pre-market trading, the stock recovered and was actually in the green at $20.10 at time of publication.

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