Under Armour ($UA) did not have a great morning today when it announced its fourth-quarter earnings. The shares estimate didn't really sway the stock market in its favor, as the athleisure company faces a number of challenges to top its competitors, Nike and Adidas. It doesn't help that its two biggest American athletes still playing today, former MVPs Cam Newton and Steph Curry, are injured and out. Hard to wear the shoes if you're on the sidelines in a suit.
We looked all across Under Armour's alternative data to see if there was another explanation for its recent stock decline, outside of the normal reasons like revenue and shareholder value and the Coronavirus. Okay, that last one isn't normal, but it is a problem facing all companies who manufacture products out of China, which is essentially everyone.
“We believe prior promotional activity has impacted the consumers’ willingness to pay full price for our brand to a higher degree than we originally anticipated” - CEO Patrik Frisk at the earnings call Tuesday morning.
Employees and Stores
Its shares tanked, falling 17% this morning before trading began, all thanks to those pesky analyst estimates. Sometimes, doing nothing but hiring and growing can really take a bite out of your budget, and Wall Street is pessimistic and skeptical about Under Armour's future. They really need Steph Curry to come back to the court and sell some sneakers, bad.
Out of all the stores Under Armour operates, about 600 of them are located in China. Not the best time to run a business there, and that's not even factoring in the whole NBA debacle that happened over the summer.
For the last two years, Twitter followers have flatlined. There was tremendous growth in the brand from 2014 until 2018, gaining a whopping 129% increase in fans on Twitter. But since then, it's barely gained anyone new; has it topped off for good?
The same problem happens on Facebook, at exactly the same time. Talking About count is down year over year, the number of likes is just at a plateau, and outside of Instagram, we wouldn't say Under Armour has a superb online following. The thing that matters is sales, and getting UA clothing on people, since that can speak volumes more than any social media post.
Interestingly enough, the average discount is down 22% from the highs seen in late 2017. That's the same time social leveled off, we wonder if those two things are correlated or just a coincidence.
With the current state of retail suffering, the Coronavirus being a huge impediment to business in China, with its star sponsored athletes not playing, sinking sales, lower than expected revenues, and a planned restructuring, Under Armour needs to strengthen the brand soon to recover from all this.
About the Data:
Thinknum tracks companies using the information they post online - jobs, social and web traffic, product sales and app ratings - and creates data sets that measure factors like hiring, revenue and foot traffic. Data sets may not be fully comprehensive (they only account for what is available on the web), but they can be used to gauge performance factors like staffing and sales.