Under Armour, Nike, and Adidas have irritated Wall Street

Under Armour (UA) fell 25% on Friday following a $60 million loss in the most recent quarter due to supply chain delays and recent Covid-19 lockdowns in China.

Following a spike in coronavirus cases, Chinese authorities implemented a lockdown in Shanghai, China’s financial metropolis, in late March. Despite the government’s efforts to ease some restrictions last month, more than 8 million inhabitants are still unable to leave their homes.

Under Armour has warned that commercial challenges in Asia will continue to harm the company this year.

“These trends, which we believe to be temporary, are also expected to impact how [2022] is shaping up,” Under Armour CEO Patrik Frisk said on an earnings call with analysts Friday.

Adidas (ADDDF) reported a drop in profit in the third quarter on Friday. Last quarter, the sportswear behemoth reported a net profit of $327 million, down 38% from the same period a year before.

Adidas attributed the drop to a “challenging market environment” in China, where sales dropped 35%, as well as supply chain issues.

“Revenues in Greater China are now expected to decline significantly in 2022,” Adidas said. The company’s stock fell 5% Friday.

Under Armour and Adidas’ disappointing results and outlook drove down other major apparel companies like Nike (NKE) and Lululemon (LULU) (LULU). Nike was down 3% on Friday, while Lululemon was down 7%. These organisations’ supply chain networks rely substantially on the Asia-Pacific area, and China is a key market for them.

Despite the fact that these firms have raised prices to offset rising costs, they claim that consumers are still ready to purchase their products.

“The underlying demand for the brand is there. The brand is getting stronger,” said Under Armour’s Frisk.

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