Ghosts and goblins weren’t the only things scaring people on Halloween this year. Under Armour Inc. (NYSE:UA, UAA) shareholders had a fright of their own when the company reported its third-quarter earnings.

UA stock made its way more than 20% lower following the results as traders fled from the company after seeing worrisome top-line results.

UA’s Third-Quarter Disaster

On Tuesday morning, UA’s third-quarter results had but one bright spot — adjusted earnings per share came in a 22 cents, above analysts’ expectations of 19 cents.

However, the good news ended there. A deeper look into the firm’s earnings showed lagging demand, operational issues and shaky future guidance.

UA was able to eek out a 2.2% revenue increase in its footwear business, as well as a 15.9% increase in connected fitness revenue. That was good news as both segments have been highlighted as important parts of the firm’s strategic plan.

But the gains were largely overshadowed by the fact that Under Armour’s apparel sales were down 8% overall. The firm’s gross margin declined to 46.2% due to the company’s need to manage inventory issues.

Under Armour also saw revenue increase in Latin America, Asia-Pacific, Europe, the Middle East and Africa. But again, those successes were mostly overlooked as investors focused on the fact that revenues in the North American market, where the firm does most of its business, fell by a whopping 12.1%.

Where UA Goes from Here

The negative reaction to the firm’s poor third-quarter results was further magnified by pared down future guidance. Initially, UA management saw net revenue for 2017 rising by around 10%. The revised guidance suggested only a low single-digit increase for the year.

Margins are seen declining by at least 190 basis points. The firm’s operating income is expected to fall between $140 and $150 million. That’s a major step down from previous estimates of between $280 and $300 million.

UA as a Crumbling Company

The ultra-low UA stock price that followed the firm’s third-quarter earnings was deserved. Investors are right to be scared.

Under Armour is falling out of favor in its home market and its supposed lifeline, footwear endorsed by NBA superstar Steph Curry, has had a lackluster reception from fans.

Fashion is fickle. I’d be willing to grant UA a pass for shoes that weren’t the hit the company thought they’d be.

However, the real problem is that Under Armour is making a bad situation worse with poor operational management. Its new line of footwear, Curry 4, is facing supply chain issues that will delay the release of some products.

What’s even more worryisome is that UA competitors aren’t posting the same kind of  dismal figures. Adidas (OTC:ADDYY) has been able to eek out growth and even Lululemon Athletica Inc. (NASDAQ:LULU), which has seen its fair share of struggles over the past few quarters, isn’t looking as beaten down as Under Armour.

There’s a certain amount of flexibility you have to give retailers in the U.S. because consumers are becoming harder and harder to pin down. But what’s happening to UA is something much bigger than that.

The Under Armour brand is struggling and consumers are starting to lose interest. It’s difficult to say exactly how the company can win them back. Signing Steph Curry was a good first step. However, the second step — leveraging his stardom — has proven to be a problem.

Buy the UA Dip?

If you think UA is able to turn itself around, you might be considering buying the dip because, how much worse could things get, right? Well, they might get pretty bad. Jim Cramer has called UA’s third quarter the firm’s worst in history and he’s now wrong — until perhaps next quarter.

Don’t forget that management has already cut guidance for the full year. Consequently, the upcoming quarter is likely to disappoint as well.

Add to that the fact that the fourth quarter has an added importance for retailers because it includes the holiday shopping season, during which most retailers do a huge chunk of their business.

UA stock could tank even further in the quarter to come as investors are disappointing all over again with the firm’s lack of focus and poor brand presence in the U.S.

I think UA has the potential to be a great brand. But right now the company has very little upside. UA stock has further to fall. I’d wait until the firm hits rock bottom with its share price in the single digits before taking a position.

As of this writing, Laura Hoy did not hold a position in any of the aforementioned securities.