Under Armour and Columbia were downgraded by market analysts Stifel, highlighting the challenges facing the sports category.
Analyst Jim Duffy lowered the two brands from “Buy” to “Hold” — while lowering Nike’s price target but maintaining its “Buy” rating.
The analyst foresaw short-to-mid-term concerns limiting the upside of both brands.
- Under Armour may have elevated levels of inventory, which could encourage price cuts and promotions.
- Columbia could be impacted by warm weather and a shortened snow season.
- Both could be affected by an economy-wide drop in demand due to government stimulus money running out.
In-Person Retail Lagging
Both Nike and Under Armour have struggled to get foot traffic at their retail stores back to pre-pandemic levels. In November, both saw in-person visits fall 11.9% below the same period in 2019, according to Placer.ai, and Nike has not matched 2019 levels in any month since April.
Under Armour’s net revenues rose 7.8% year-over-year in the third quarter to $1.5 billion, with net income nearly tripling from $38.9 million the previous year to $113.4 million.
It remains to be seen if rising COVID cases in the U.S. lead to renewed interest in apparel and at-home fitness.
On Wednesday, California reimposed a mask mandate for all indoor businesses, including gyms, with certain exceptions in cases where everyone involved is vaccinated.