Investment Thesis
After Under Armour (UAA) recently reported 4th quarter 2017 results, I don’t see a turnaround in the near future despite management’s focus on inventory optimization and innovation. It’s going to take time for the company to regain its strategy of being an innovative upscale brand after its recent effort to maintain sales growth through deep discounting. Given the fact that the stock is still expensive on a Price-to-Earnings (P/E) ratio and a difficult turnaround ahead, I expect the stock to continue to decline.
Background Information
When Under Armour reported fourth-quarter results on February 13th, the company was wrapping up a difficult 2017. A decline in the North American athletic-leisure trend, a challenging retail environment, disappointing product launches, and departures/controversies surrounding key executives all culminated in another difficult year. In 2017, the stock lost more than half of its value even after losing more than 30% in 2016. It has been a really difficult reversal for the once market disruptor. With 2017 behind the company, was the company able to finally find a bottom in the fourth-quarter and provide some optimism on 2018?
