Wall Street is fed up with Under Armour, Nike and Adidas

By Nathaniel Meyersohn, CNN Business

Triggered supply chains and a coronavirus outbreak in China are causing headaches for the biggest sports brands.

Under Armor fell 25% on Friday after the company posted a $60 million loss in its latest quarter due to supply chain delays and China’s recent Covid-19 lockdowns.

Chinese authorities imposed a lockdown on Shanghai, China’s financial hub, in late March following an increase in coronavirus cases. Although the government started lifting some restrictions last month, more than 8 million residents are still banned from leaving their residential compounds.

Under Armor has warned that pressures in Asia will continue to hurt its business this year.

“These trends, which we believe are temporary, should also impact how [2022] looms,” Under Armor CEO Patrik Frisk said in a conference call with analysts on Friday.

Meanwhile, Adidas also said on Friday that its profits fell last quarter. The sportswear giant reported net profit of $327 million last quarter, down 38% from the same period a year ago.

Adidas said the decline was caused by a “difficult market environment” in China, where sales fell 35%, as well as supply chain disruptions.

“Revenues in Greater China are now expected to decline significantly in 2022,” Adidas said. Shares of the company fell 5% on Friday.

The lackluster results and forecasts from Under Armor and Adidas dragged down other major sportswear brands, including Nike and Lululemon. Nike was down 3% and Lululemon fell 7% on Friday. China is a key market for these companies and their supply chain networks are also heavily dependent on the Asia-Pacific region.

Although these brands have raised their prices to combat rising costs, they say consumers are still eager to buy their equipment.

“The underlying demand for the brand is there. The brand is getting stronger,” said Under Armour’s Frisk.

— Anna Cooban of CNN Business contributed to this article.

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