Why did Under Armour Stock Sink on Wednesday? Inventory Issues Loom Large

Despite a beat and raise on earnings, Under Armour (NYSE:UAA) shares slumped on Wednesday as the market homed in on inventory and margin concerns.

Shares of the Maryland-based apparel manufacturer initially gained sharply in pre-market action after a positive headline print. However, as the market digested a 50% jump in inventory levels, a sharp contraction in gross margins, and guidance for a longer promotional environment, the stock rapidly reversed course into the red.

“We definitely have seen that the promotional environment went a little bit deeper and we believe it’s going to go a little bit longer. And a lot of that has to do with some of the building inventories that are out there with all the brands,” Under Armour CFO Dave Bergman told analysts during a call on Wednesday. “That is something that all retailers are going to need to work through in the coming quarters.”

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