UAA - Why did Under Armour stock sink on Wednesday? Inventory issues loom large

Despite a beat and raise on earnings, Under Armour ( NYSE: UAA ) shares slumped on Wednesday as the market homed in on inventory and margin concerns.

Shares of the Maryland-based apparel manufacturer initially gained sharply in pre-market action after a positive headline print. However, as the market digested a 50% jump in inventory levels, a sharp contraction in gross margins, and guidance for a longer promotional environment, the stock rapidly reversed course into the red.

“We definitely have seen that the promotional environment went a little bit deeper and we believe it's going to go a little bit longer. And a lot of that has to do with some of the building inventories that are out there with all the brands,” Under Armour CFO Dave Bergman told analysts during a call on Wednesday. “That is something that all retailers are going to need to work through in the coming quarters.”

Under Armour ( UAA ) stock slipped as much as 11% in Wednesday’s trading before closing down 8.27% . The inventory issues at Under Armour ( UAA ), along with more explicitly bearish results from Capri Holdings ( CPRI ), dragged much of the apparel retail sector on Wednesday .

For further details see: