In the first quarter of fiscal year 2017, Under Armour (NYSE:UA) recorded its first loss since it went public in 2005, posting a $2.27 million loss or 1 cent a share. Discounts have heavily weighed on its results. The company’s first-quarter gross profit margin fell 70 basis points to 45.2 percent. It has forecast its gross margin to be “slightly down” in 2017, compared to a margin of 46.4 percent in 2016.
Sales in its footwear segment grew only 2 percent for the quarter, falling from a huge 64 percent increase during the same period a year ago. The latest model of its Stephen Curry-branded line of basketball shoes has not sold nearly as well as the first two sneakers bearing the NBA star’s name. However, CEO Kevin Plank is optimistic that the company will grow market share in footwear moving forward.
Under Armour plans to shift its focus to shoes priced at more than $100. The company is also planning the launch of a personalized e-commerce shoe platform in the near future. The platform would let customers design and order their own custom sneakers online. In the near future, the company will also open a “footwear building” in Portland, Oregon.
The athletic apparel giant has been adding plenty of new distribution points for its gear. Under Armour currently has around 13,000 points of distribution today, including those in more than 1,000 Kohl’s stores. Plank said during the earnings announcement that the Kohl’s deal has “exceeded our expectations to date, and they are a very good partner.” However, some analysts are concerned that the Kohl’s deal could dilute Under Armour’s brand image in the long run.
While Under Armour’s North American sales fell 1 percent for the quarter, the company’s international sales were up 52 percent overall, representing 20 percent of total revenue in the quarter. The skyrocketing international sales suggests the brand is resonating strongly overseas and has ample room for growth. That growth prospect may help revive the company’s shares. The stock has plummeted more than 50 percent over the past year.