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Actionable news in UA: UNDER ARMOUR Inc,

Under Armour: What the Heck Just Happened?!?!

Gross margin fell 160 basis points to 45.9%, while inventory increased 22% to $1.2 billion.

In addition, Under Armour said that expects 18 cents to 20 cents a share in diluted earnings for fiscal 2017, compared to a prior range of 37 cents to 40 cents, and well below the 37-cent consensus estimate. It sees net revenue up low single digits, compared to previous guidance of a 9% to 11% increase, while it sees gross margins down 220 basis points, and adjusted gross margin down 190 basis points.

Nomura Instinet's Simeon Siegel reiterated a Reduce rating and $13 price target on the stock today:

With 3Q sales declining 5%, it seems UA is by definition not a growth company. And absent a reason to believe sales can re-inflect positive, something that appears difficult to get comfortable with given the issues we have been discussing regarding shelf space, particularly at Dick's Sporting Goods (DKS), we remain particularly concerned over the company’s growth multiple. With North America -12%, we continue to believe UA overextended its sales reach, and we are concerned over further revenue contraction from here.

FBR Capital Markets' Susan Anderson reiterated a Sell rating on the stock, writing that she continues "to expect revenue to be weaker for fiscal 2017 with lackluster trends in North America and at approximately 39x FY2 EPS we view UAA as overvalued for EPS growth."

Under Armour is down 15.1% to $13.92 in recent trading, and it's also dragging down Nike (NKE), although lululemon (LULU) recovered from previous weakness and is now trading higher.

The SPDR S&P Retail ETF (XRT) is up 0.5% at recent check.


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