Under Armour sinks after Dick's blames it for its sales slump

Reuters/AI Project

Boxer Carlos Balderas poses for a portrait at the U.S. Olympic Committee Media Summit in Beverly Hills, Los Angeles, California.

• Dick's Sporting Goods blamed Under Armour for its second-quarter sales miss on Wednesday.
• Under Armour sank more than 7% as Dick's conference call progressed.
• Follow Under Armour's stock price in real-time here.

Under Armour plunged more than 7% Wednesday after Dick's Sporting Goods blamed the brand's recent shift in distribution channels for a slowdown in sales.

Ed Stack, the chief executive at Dick's, told analysts on the retailer's second-quarter earnings call that it had seen a "significant decline" in Under Armour sales after the Baltimore-based brand shifted its distribution strategies to include cheaper retailers like Kohl's and DSW.

"We experienced continued significant declines in Under Armour sales as a result of their decision to expand distribution," Stack said. "We are very confident our sales trajectory will improve next year as these headwinds are expected to subside."

Dick's reported quarterly earnings that topped Wall Street expectations, but its stock fell as much as 14% after sales came in at $2.18 billion, missing the anticipated $2.23 billion.

Shares of Under Armour have been slowly climbing since the beginning of the year, and were beginning to reverse a summer decline before Wednesday's selloff.

Analysts have worried that the company could be hurting its image by shifting to lower-cost retailers.

"Given poor brand distribution decisions, we believe Under Armour risks are becoming more like Reebok than Nike," Sam Poser, an analyst at Susquehanna, said in a note to clients earlier this year. "There is no fundamental recovery in sight."

Shares of Under Armour are up 29% this year.

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