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Under Armour Inc (UA) Stock Is Down 30%, But It’s Still Not a Buy

Investors should steer clear of UA stock, at least until its footwear business is on track

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Athletic apparel maker Under Armour Inc (NYSE:UAA, NYSE:UA) has seen its share price drop over 30% since the beginning of the year as worries about the firm’s growth potential and profitability drove investors away. There is some potential for UA stock with the company’s connected fitness initiative and athleisure efforts, but the firm is still facing far too many headwinds to make Under Armour a good bet.

UA Stock: Under Armour Inc (UA) Stock Is Down 30%, But It’s Still Not a Buy
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UA Stock Is Losing Ground

There was a time when Under Armour was grabbing marketshare away from big-time competitors like Nike Inc (NYSE:NKE), but now that UA has become one of the largest athletic brands in the country, Under Armour appears to be doing more losing than gaining.

Last quarter, UA’s North American sales fell by 1%. Overall, UA’s sales rose 7%, largely due to strong international growth. While it’s important that the firm expands outside the U.S., a sales slide in North America is a big deal for Under Armour because that’s the firm’s bread and butter. Some 80% of UA sales are in the company’s home market.

The sales slide was exacerbated by other issues suggesting that Under Armour is losing touch with what consumers want.

A Piper Jaffray survey showed that teens in the U.S. are responding to both Nike and Adidas AG (ADR) (OTCMKTS:ADDYY), but that Under Armour is losing relevance.

Under Armour’s Sneaker Situation

Perhaps the most troubling thing about UA stock at the moment is the company’s sneaker sales.

As I mentioned back in February, Under Armour is operating in a massively competitive environment. Not only is the retail sector under pressure, but bumping up against major players like Nike that have been seated at the top for years is a tricky situation. In order to really compete with the big boys, UA needs a solid footwear line, something the firm has been lacking.

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