Moody’s downgrades Under Armour

Moody's Investors Service said it downgraded Under Armour, Inc.'s senior unsecured ratings to Baa3 from Baa2.

The outlook is negative.

"The downgrade reflects Under Armour's weaker-than-expected performance year-to-date and significant downward revision in guidance for the rest of 2017," Moody's apparel analyst Mike Zuccaro said in a news release.

“Sales continue to be negatively impacted by the ongoing challenges in the North American athletic apparel retail environment, including weak traffic, store closures, shifting consumer preferences, high inventory levels and high promotional activity,” the agency explained in the release.

“For Under Armour, this was compounded by execution issues with the recent implementation of a new enterprise resource planning ("ERP") system resulted in delayed shipments and loss of productivity.

“Despite continued strength across its international and DTC businesses, which grew revenue 35% and 15%, respectively, in the quarter, adjusted operating profit is being severely impacted by the drop in sales growth.”

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