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3 Sports Wear Companies Traders Care About Right Now
Published Updated Fri, May 13 02:23
Supply chain disruptions and lockdowns in China are generating problems for major sporting brands.
Under Armour (UA) fell 25% on Friday after reporting a $60 million loss in its latest quarter, owing to supply chain bottlenecks and ongoing shutdowns in China. The Chinese government implemented a lockdown in Shanghai, China’s financial capital, in late March. Even though the government began to ease certain restrictions last month, more than 8 million people are still barred from leaving their housing complexes. Under Armour has warned that Asian pressures will continue to harm its revenue this year.
“These tendencies, which we believe are transient, are also likely to affect how [2022] is shaping up,” Under Armour CEO Patrik Frisk said on a conference call with investors on Friday.
Adidas (ADDDF) also reported a drop in profit last quarter on Friday. The sportswear behemoth posted a net profit of $327 million in the fourth quarter, a 38% decrease from the same period a year earlier. Adidas attributed the loss to a “difficult market climate” in China, where sales plunged 35% and supply chain interruptions.
According to Adidas, “revenues in Greater China are now likely to decrease dramatically in 2022.” The company’s shares dropped 5% on Friday.
Under Armour and Adidas’ disappointing earnings and forecasts drove down other major sportswear manufacturers such as Nike (NKE) and Lululemon (LULU). Nike was down 3%, and Lululemon was down 7% on Friday. China is a critical market for these businesses, and their supply chain networks are strongly reliant on the Asia-Pacific region.
Despite boosting prices to offset rising costs, these companies claim that customers are still ready to purchase their products.
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