Under Armour Stocks Drop After Downgrade from Wall Street Firm

Published on: 11 Jan, 2018

Under Armour Inc (NYSE: UA) shares fell 3.7% on Tuesday after Wall Street firm Susquehanna Financial highlighted poor brand management. According to Susquehanna Financial, Under Armour will reverse its course and lose its 30% gain from the past eight weeks in the next year.

"Sell Under Armour. The Under Armour brand remains at risk," Susquehanna Financial analyst Sam Poser informed in a note to clients. "Given poor brand distribution decisions, we believe Under Armour risks are becoming more like Reebok than Nike. …There is no fundamental recovery in sight."

Poser believes the company should stop advertising with smaller retailers such as Kohl’s, Designer Shoe Warehouse, and Famous Footwear and begin advertising with bigger sports retailers since the smaller retailers are causing major sporting stores such as Dick’s Sporting Goods Inc. and Hibbett Sports Inc. to “plan their Under Armour Businesses down.”

Under Armour just recently began selling at non-sporting goods stores, expanding its products to Kohl’s, DSW, and Famous Footwear in Spring 2017. Poser says the expansion of Under Armour products to these stores changed the perception of Under Armour for the worse.

The company has lost 4% in the past three months whereas major competitor Nike Inc. shares have gained 25.3%.

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Nelson Cheng

Email: nelson@financialinsiders.com

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