Under Armour shares slumped after the athletic gear maker said it expects a big financial hit from the viral outbreak in China. Separately, it also said it may need to restructure this year at a cost of hundreds of millions of dollars.
In a statement on Tuesday, Under Armour said revenue this year will decline by a "low single-digit percent" compared with 2019 sales. The impact stems from "market demand dynamics" in North America, as well as a projected decline in sales of as much as $60 million in the first quarter due to the coronavirus.
Under Armour shares declined $3.61, or 17.6%, to $16.84 in early Tuesday trading.
The company said it's also looking at pre-tax charges this year of $325 million to $425 million related to restructuring. Under Armour also said that it may scuttle the opening of a planned flagship store in New York City.
Under Armour "noted it may pursue another restructuring initiative which may include abandoning plans to open the Fifth Ave flagship in NYC, though the writing was on the wall for this outcome for several years already in our view," Wedbush Securities analysts said in a report.
Under Armour swung to a loss of $15.3 million in the final quarter of 2019, or 3 cents per share in the fourth quarter. Its adjusted profit was 10 cents per share, meeting the expectations of analysts polled by Zacks Investment Research. But its revenue of $1.44 billion was just short of Wall Street projections.
Under Armour isn't alone in feeling the impact from the coronavirus. With thousands of U.S. and foreign companies operating in China, the world's second-largest economy,ranging from Apple, Google and Tesla, while also hurting China's economic growth, CBS MoneyWatch reports.