What happened
Week to date, shares of Under Armour(NYSE: UA)(NYSE: UAA) were down 11.5% through Thursday's close, according to data provided by S&P Global Market Intelligence. The sportswear brand delivered earnings results this week that beat Wall Street's expectations on revenue and earnings.
The stock has been in a downward spiral in recent years, and the company's outlook for the year ahead didn't persuade investors that a turnaround is in store. Year to date, shares have fallen 24%. That extends the stock's five-year slide to 59%.
So what
In the fiscal fourth quarter, revenue rose 10% on a constant currency basis amid a challenging backdrop for retail sales. This represented an acceleration over the full year's 6% increase. But that growth spurt won't carry over to the new fiscal year.
CEO Stephanie Linnartz called fiscal 2024 "a year of building for the brand." Guidance calls for revenue to be flat to up slightly over fiscal 2023. Investors will be looking for Linnartz, who just took over the reins in February, to improve top-line growth over the next few years.
Under Armour is still a top brand in sportswear with a lot of potential. The company's growth in recent years has performed comparably well against competitors Nike and Adidas.
Data by YCharts
Now what
Delivering improved revenue growth is Linnartz's top priority. "I am prioritizing significantly amplifying global brand heat; delivering elevated design and products, with a focus on sportstyle, footwear, and women; and positioning us to drive better sales growth in the United States," Linnartz said.
A successful turnaround would send this cheap apparel stock much higher, but it's going to take stronger top-line growth to get it moving up.
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John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nike and Under Armour. The Motley Fool recommends the following options: long January 2025 $47.50 calls on Nike. The Motley Fool has a disclosure policy.
