WASHINGTON — Baltimore-based Under Armour lost a quarter of its market value Tuesday after issuing 2017 sales guidance that came up short of expectations.
Changes in foreign currency and sales of less profitable product lines will hurt gross margins, according to the company.
Under Armour still had $4.8 billion in 2016 revenue, up 22 percent from the previous year. Its sales are growing the fastest overseas, with international revenues growing 63 percent last quarter compared to 16 percent growth in North America.
However, international sales still account for just 15 percent of total sales.
Under Armour said that sales this year will increase as much as 12 percent to $5.4 billion, a $600 million increase over last year, which would be Under Armour’s smallest annual gain since going public in 2005, according to Bloomberg data.
For the fourth quarter, revenue rose 12 percent to $1.3 billion.
“Numerous challenges and disruptions in North American retail tempered our fourth quarter results,” said founder and chief executive Kevin Plank in a statement.
Gross margins fell to 44.8 percent, from 48 percent a year earlier.
“More favorable product costs were offset by aggressive efforts to manage inventory, changes in foreign currency and the outperformance of footwear and international businesses in the overall mix, which carry lower margins than our apparel and North American businesses,” the statement said.
Under Armour stock (NYSE: UAA), was down $7.68, or about 26 percent, in Tuesday morning trading for $21.26 per share.
