Under Armour reported losses in the transition quarter ending March 31. It also reported a somewhat dismal outlook for fiscal year 2023 leading to a tumble in its stock price. On Friday, the company, popular for its apparel and footwear, saw a 25 percent loss in share price which stood at $10.89. This is its lowest price in 52 weeks. Rival Adidas has also performed below par.

Under Armour underperformed when compared to estimates by Wall Street analysts surveyed by Refinitiv. The results of the quarter ending March 31 are as follows:

A loss of 1 cent per share adjusted though an earnings of 6 cents was predicted.
A revenue of $1.3 billion though the predicted revenue was $1.32.
A net loss of $59.6 million translated to 13 cents per share when compared with net income of $77.8 translated to 17 cents per share, year on year.
Sales in North America increased by 4 percent to $841 million.
International sales increased by 1 percent to $456 million, with a 14 percent fall in Asia-Pacific including China.

Chief Financial Office of Under Armour David Bergman explained that the fall in profits was due to a rise in freight charges, including ocean freight. The apparel and footwear maker also used more air freight leading to elevated costs.

Covid controls in China also hit the profitability of the company which produces approximately 67 percent of its apparel and footwear in Asia; in China, Vietnam, Cambodia, Malaysia and Jordan.

Bergman noted that the first quarter of the fiscal year 2023, beginning on April 1, 2022 and ending on March 31, 2023 will see sales flat or slightly less than sales in the same period last year. He said that the slowdown would be seen the first half of the fiscal year.

Bergman noted that the flat performance would be due to order cancellations and delays in supply chain. Covid-19 impacts in China would remain but the CFO was hopeful that it would lessen as the year continued. The company projected an earning between 63 to 68 cents below analysts’ estimations of 86 cents.