Under Armour investors beginning to lose faith, analyst says

Under Armour (UA, UAA) revealed a weaker-than-expected full-year forecast for its fiscal 2025. The disappointing guidance is compounded by the apparel brand's restructuring plans under returning CEO Kevin Plank.

CFRA Research Analyst Zachary Warring and Tom Nikic, Wedbush Securities SVP and Senior Equity Research Analyst for Apparel and Footwear, sit down with Market Domination to talk the company's operating margins hurdles.

"You do not want to be a brand that competes solely on price that... leads to a downward spiral of pricing and that's problematic," Nikic tells Yahoo Finance. "The issue is that I don't think they've done what they need to do from a product development perspective, they don't really have a lot of new and exciting products to drive consumer demand."

For more expert insight and the latest market action, click here to watch this full episode of Market Domination.

This post was written by Luke Carberry Mogan.

Video transcript

Well, another retailer that we are watching is under armor, that company delivering downbeat guidance for 2025 while also outlining its restructuring plans, Ceo Kevin Plank warning of pressure to the brand's top and bottom line in the near term as it builds a premium positioning for under armor or tries to here to discuss Red Bush Security, senior equity research analyst analyst, Tom Nick, along with CFR, a research analyst, Zachary Warring.

Thank you both so much for being here.

Um Tom, I'm gonna start with you.

Here is under armour doing what it needs to do to improve performance.

Well, I I I'd say in some ways, yes and in some ways, no.

Uh on the positive side, a big focus on the call today was um reducing the reliance on discounting, uh reducing the reliance on, on promotion to drive sales.

Um which I think is absolutely the right thing to do.

Um You know, you do not wanna be a brand that competes solely on price uh that uh is just, you know, leads, leads to a downward spiral of pricing and uh that's problematic.

Uh the issue is that uh I, I don't think they've done what they need to do from a, uh a product development perspective.

Uh They don't really have a lot of new exciting products um to, to, to drive consumer demand.

Um, you know, I think, you know, the, the marketing has been somewhat lackluster.

Uh, so I think, uh, you know, some of that, you know, basic, uh uh you know, brand building blocking and tackling, I think there's a lot of work to be done.

But as far as uh you know, trying to, trying to maintain pricing integrity for the brand, I think that that's uh definitely a step in the right direction.

And Zach, let's bring you in here as well.

And I guess I question to begin with Zach kind of big picture, you know, when you heard about the strategy, the restructuring is, is it the smart right move, Zach.

Yeah, you know, been following this company for a while now.

Um and I can't tell you how many times I've heard the, the word restructuring with them.

Um And I'm just, I'm having a hard time.

I think investors have also lost kind of faith here too.

Um believing management.

Um just because they've had such poor execution over the past 10 years, you know, they, they've had a really hard time outside of 2020 you know, operating margins below 5% well below peers.

Um And even now today, you know, shares rebounded from this morning's low, you know, shares trade over 30 times this next 12 month earnings.

Uh that's higher than Lulu and Nike right now.

Um, two companies that have always executed.

Well, so, you know, to me, I've been following this company for a while and at, at this point I'm, I'm really show me, uh, and, and I'm kind of stepping away from, well, maybe, you know, that this is what they say they're gonna do.

Um, and, and I'm really more of a show me.

Uh, I, I, I'd like to see a couple of quarters where Nike Ara uh under Armour actually, you know, starts to improve operating margins above 5%.

Um, and kind of goes towards peer averages.

Um, but I just haven't seen that from them and, and I've heard this, uh, you know, 15 times in the last 10 years, you know, restructuring management change and I'm just, you know, at this point it's a show me thing.