Under Armour Inc (UAA)

Under Amount Inc (UAA) stock fell by 10.74% due to the unexpected return of founder Kevin Plank as CEO. Investors reacted to the news of the leadership change, with shares of the athletic apparel brand dropping significantly.

• Kevin Plank's Return: Kevin Plank, who founded Under Armour in 1996 and led the company through most of its growth, has returned to the helm after stepping down four years ago. He replaces Stephanie Linnartz, who had joined about a year ago after a long tenure at Marriott International.
• Investor Uncertainty: The timing and nature of the CEO change caught investors off guard, as Linnartz was in the early stages of a three-year turnaround plan for the brand. Plank's return raises questions about the direction and strategy of Under Armour moving forward, particularly as the company navigates post-pandemic consumer trends and industry challenges.
• Strategic Outlook: Plank expressed optimism about the company's future and highlighted the team's efforts to drive success for athletes, customers, and shareholders. However, the market response suggests investor skepticism about the abrupt change in leadership and its implications for Under Armour's turnaround efforts.
• Market Reaction and Analyst Views: Wall Street tends to react negatively to surprises, and investors are cautious following this development. While Linnartz was well-regarded, the CEO change implies that her strategy may not have been gaining traction as expected. Plank's previous tenure was marked by rapid growth, but replicating that success in the current environment presents challenges.

Shares of Under Armour Class A (UAA) dropped by 5.42% from $7.02 to $6.98 in the trading on Monday, Novemeber 13, 2023. The reasons why UAA down is due to mixed quarterly results and lower-than-expected guidance.

• Mixed Revenue Results: While Under Armour beat earnings per share (EPS) expectations for the quarter, with earnings of 24 cents per share compared to the consensus estimate of 21 cents per share and an improvement from 19 cents per share in the year-ago period, its net revenues came in almost in line with expectations but declined 0.5% year-over-year. A decrease in revenues, even if slight, can signal concerns about the company's growth prospects.
• Guidance Revision: Management revised its guidance for fiscal 2024, indicating expectations of a 2-4% decline in revenues for the current fiscal year. This revision downward from the earlier expectation of flat to slightly up revenue growth could have dampened investor sentiment. Additionally, while the company expects an improvement in gross margin, it lowered its earnings per share (EPS) guidance to a range of 47-51 cents per share, down from 84 cents per share reported in fiscal 2023. These downward revisions could have contributed to the stock's decline.