While things were looking up for Under Armour earlier this month, it seems the recovery might have been short-lived. According to The Motley Fool, the worst yet might be on the horizon for the sports apparel company.
The Motley Fool breaks down Under Armour’s potential problems into four main issues. The first is that Under Armour’s sales faced a slowdown this year due to tougher competition, Sports Authority’s bankruptcy, and Under Armour’s dependence on the North American market. It also seems that the company is betting big on women’s apparel, which can be unpredictable.
Aside from that, the second issue is that while Under Armour is claiming overseas growth will offset its losses, that’s probably not a realistic prediction. The third problem is its declining margins and weak profitability. The company is forced to compete with Nike and Adidas, both of which have an advantage when it comes to branding, sponsorship and scale.
The final problem pertains to its stock valuation, which according to The Motley Fool, is trading at unreasonable valuations. So, it looks like Under Armour isn’t in the clear just yet.
