Retail

Under Armour expects shipping delays and is taking a sales hit because of deadly coronavirus

Key Points
  • Under Armour expects the coronavirus outbreak in China to lower sales by roughly $50 million to $60 million during the fiscal first quarter.
  • "We think it's reasonable to expect industry-wide delays in terms of delivery around the world — including potentially missed shipment[s] and service windows," CEO Patrik Frisk says.
People walks past a Under Armour clothing store in Siam Center, Bangkok.
Guillaume Payen | SOPA Images | LightRocket | Getty Images

Under Armour joins a growing list of retailers that expect to take a hit because of the deadly coronavirus outbreak in China, calling for shipping delays and obstacles in obtaining certain fabrics for its athletic apparel.

"We think it's reasonable to expect industry-wide delays in terms of delivery around the world — including potentially missed shipment[s] and service windows, and the need for increased air freight and additional measures at ports that could create unforeseen congestion," CEO Patrik Frisk told analysts Tuesday morning.

Under Armour said it expects the coronavirus outbreak in China to lower sales by roughly $50 million to $60 million during the fiscal first quarter. But the impact could grow larger if the situation worsens, the company said.

Under Armour has about 600 stores in China.

"We are assessing possible impacts relating to fabric trim and package sourcing and potential delays and capacity challenges that could prove to be difficult in the second half of the year," Frisk added.

Factories in China continue to stay closed, he said, and timelines continue to change for when they might reopen.

"We are electing to stay appropriately prudent and [are] not prepared to quantify many of these elements today, as a defense could meaningfully evolve in the coming weeks," Frisk said.

Including Tuesday's losses, Under Armour's stock has fallen nearly 20% over the past 12 months. The company has a market cap of about $7.5 billion.

The company also on Tuesday reported fourth-quarter sales that missed analysts' estimates, as it issued a bleak outlook and said it faces "ongoing demand challenges" for its athletic apparel and sneakers.

Under Armour is calling for sales to be down a low-single-digit percentage in fiscal 2020. That includes a high-single-digit drop in sales in North America, Under Armour said. Analysts had been calling for overall sales to be up 4.2% for the year.

Read the full earnings press release here.

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