• Business Insider

Under Armour's dominance ‘has come to an end'

Under Armour's status as the golden child of athletic retail may be ending.

The company's shares were crashing by as much as 20% on Tuesday after earnings showed global weakness — especially in North America. Profits also eroded, a sign that more shoppers were unwilling to pay full price for Under Armour.

Revenue in North America came in at $1.3 billion, less than Wall Street's estimate of $1.4 billion.

And the slowdown is expected to continue.

"Under Armour's long run of stellar performance has come to an end this quarter," Hakon Helgesen, a retail analyst at the research firm GlobalData, wrote in a note to clients, adding that "performance has deteriorated at a rate far in excess of a natural slowdown."

Helgesen wrote that competition from athletic brands like Nike, Adidas, and Lululemon hurt Under Armour's performance.

Since it became acceptable to wear gym clothes essentially everywhere, Under Armour's competitors have ramped up innovation.

Lululemon has been aggressively designing new styles of clothing that some customers seem to prefer to Under Armour's sporty aesthetic and loud logos.

And Nike's investment in high-end footwear has challenged the success of Under Armour's Curry 3 shoe.

Helgesen wrote that it's possible Under Armour had saturated the North American market and needed to turn to global customers for growth.

"With investments in global e-commerce and in the development of physical stores in key international locations, we believe that this engine will continue to spin rapidly over the next fiscal year," Helgesen wrote. "However, the return on these investments will be somewhat lower than those made in Under Armour's home market. This ultimately means that unless North American growth gets back on track, earnings will remain underpressure across the year ahead."