What happened
Shares of Under Armour (UA +3.62%) (UAA +3.67%), a leading athletic apparel, footwear, and accessories manufacturer, were down another 5% Tuesday afternoon due to concerns about the coronavirus outbreak.
So what
Today's decline merely adds to its near 30% drop over the past month, and emphasizes to investors that the company's turnaround isn't going to be soon. Much of the decline is simply due to broader market pressure: The Dow plunged over 1,000 points Monday, and by the close of trading today had dropped another 850 points. Monday was the worst day for the Dow in two years and only the third time in history it logged more than a 1,000-point drop. The coronavirus adds to Under Armour's already gloomy guidance: It expects revenue to decline in the low single digits and for the coronavirus to have a negative $50 million to $60 million impact to first-quarter sales.
Image source: Getty Images.
Now what
There's no denying that Under Armour is facing multiple challenges with its business besides the disease outbreak in China. It took a charge to restructure its Japanese licensee, is dealing with rising costs, and has recorded lagging e-commerce results. And the company is struggling to keep pace with competitors in North America.
Under Armour was once a hip new brand and a dream growth stock, but it operates in an industry with juggernaut competitors. Long-term investors should take daily stock swings with a grain of salt, especially when they are based on market fears out of management's control. That said, investors should understand 2020 will be a challenging year for the company, and its turnaround remains in the distance.
