Under Armour stock sinks on weak profit guidance

Yahoo Finance Live anchors Julie Hyman and Brad Smith discuss the decline in stock for Under Armour.

Video transcript

BRAD SMITH: Also, let's talk about Under Armour here on the day. This was an interesting one to track this morning. Shares of Under Armour sinking after demand took a hit from higher inflation, sending the retailer's annual sales forecast and profit outlook below expectations here. Shares are down by about 8%.

And one thing stuck out to me-- and I would have loved to listen in on this earnings call, just to see the tone that was struck here. But one thing really stuck out, which was in the early comment that they provided, and saying, essentially, that this is going to be a year of rebuilding, essentially. And that is a theme that we've heard from some of the other tech companies, a year of efficiency.

The only reason why I would say that this strikes me a little bit more in this, kind of, year of rebuilding and positioning for the brand here is because, you know, as we've just gotten through some of the NFL draft, for the sports fans out there, and Under Armour's got quite a few sports fans that they are trying to market into, when you hear a year of rebuilding, that strikes you as a, OK, things are going to be bad for a while, for a little bit here, as you're trying to turn the ship around.

They mentioned in this call-- and they've got a new CEO that's at the helm-- that they need to prioritize the athlete more, and that, kind of, signals maybe where they got away from some of the performance element of the athlete and still were looking across where they could get into that, kind of, athleisure type of trend, that Lululemon, Nike, all of them, Adidas had invested heavily into. But for some of those other brands, they had continued to prioritize the performance side of that athletic landscape.

And so, for Under Armour, getting back into that-- of course, a brand that has one of the greatest shooters of all time in the NBA, Steph Curry, under its brand for a huge contract-- it'd be interesting to see where they, kind of, leverage some of those insights from the athletes to build that on that next leg of growth.

JULIE HYMAN: I mean, the bottom line here is they're not selling enough stuff.

BRAD SMITH: Yeah.

JULIE HYMAN: That's the bottom line. And they have too much inventory on hand. They're going to have to keep marking stuff down in order to clear that inventory. It's not a good position to be in. For whatever reason, whether it's the athletes, blah, blah, blah, that's the bottom line, and that's the crux of or one of their big problems, I would say.