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Under Armour shares clobbered as earnings miss

Under Armour Inc. reported lower sales and profits and trimmed its full-year outlook as the sportswear company continues to struggle with slack demand and increasing competition in North America.

For the three months ended in September, Under Armour's profit fell 58% to $54.2 million as sales declined 4.5% to $1.41 billion from the same period a year ago. Analysts polled by FactSet had expected earnings of $84 million and revenues of $1.48 billion.

Shares, which had fallen more than 40% so far this year, dropped another 15% in premarket trading. Earlier this year, the company snapped its streak of 26 straight quarters of sales rising by 20% or more. Since its fourth quarter of 2016, revenue growth has sputtered.

"Against this difficult backdrop, our management team is working aggressively to evolve our strategy and level of execution to proactively address these challenges," founder and Chief Executive Kevin Plank said in a news release.

The sportswear maker brought on a new president and chief operating officer in June, announced layoffs and restructuring in August. Kip Fulks, the company's co-founder and widely seen as Mr. Plank's top deputy, left on sabbatical earlier this month. The Wall Street Journal reported that the company is considering exiting some categories, including tennis.

Unlike top rivals Nike Inc. and Adidas AG, the Baltimore-based company does the vast majority of its sales in apparel, rather than footwear, and in North America versus globally, making it particularly susceptible to increased competition in the U.S. Under Armour said its revenues for North America fell 12% and apparel fell by 8% for the most recent quarter, due to lower demand for outdoor, women's training and youth clothes in particular.

The company lowered its full year financial forecast, expecting net revenue growth in the low single digits and operating income of between $0 and $10 million. In accordance with Under Armour's ongoing restructuring, the company said it expects charges of between $140 million and $150 million, up from between $110 million and $130 million.

Write to Sara Germano at sara.germano@wsj.com


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