Under Armour's dominance 'has come to an end'

Under Armour's status as the golden child of athletic retail might be ending.

The company's shares are crashing up to 20% after earnings showed global weakness — especially in North America. Profits also eroded, a sign that more shoppers are unwilling to pay full price for Under Armour.

Revenues in North America were $1.3 billion — less than Wall Street's estimate of $1.4 billion.

And the slowdown is expected to continue.

"Under Armour's long run of stellar performance has come to an end this quarter," Hakon Helgesen, retail analyst at research firm GlobalData, wrote in a note to clients, adding that "performance has deteriorated at a rate far in excess of a natural slowdown."

See notable stores that no longer exist like they used to:

Notable stores that no longer exist like they used to
See Gallery
Notable stores that no longer exist like they used to
Signage is displayed at a Filene's Basement store in Chicago, Illinois, U.S., on Wednesday, Nov. 16, 2011. Bankrupt discount-clothing retailer Syms Corp. and its Filene's Basement LLC unit won court approval to conduct going-out-of-business sales to liquidate their inventory. Photographer: Tim Boyle/Bloomberg via Getty Images
A Circuit City store is seen in Dallas, Texas in this file photo taken June 19, 2008. U.S. electronics retail chain, Circuit City is considering closing at least 150 stores and cutting jobs, the Wall Street Journal said on October 20, 2008, citing people familiar with the company. REUTERS/Jessica Rinaldi/Files (UNITED STATES)
NORRIDGE, IL - JANUARY 30: KB Toys signage is visible atop the entranced to its store January 30, 2004 in Norridge, Illinois. Pittsfield, Massachusetts-based KB Toys says it will close 375 stores nationwide including this Norridge, Illinois store. (Photo by Tim Boyle/Getty Images)
ALEXANDRIA, VA - AUG 14: An Ames Department Store stands August 14, 2002 in Alexandria, Virginia. Ames Chairman and CEO Joseph R. Ettore in announced that the discount chain would close all 327 store locations leaving 22,000 unemployed. (Photo by Mike Theiler/Getty Images)
The Blockbuster movie rental store is open for business in the Denver suburb of Broomfield, Colorado April 6, 2011. Dish Network Corp won Blockbuster Inc in a bankruptcy auction for about $320 million, boosting the satellite TV provider's online features and marketing reach. Dish, the second-largest U.S. satellite TV company after DirecTV, trumped at least three other bidders, including activist investor Carl Icahn, for the one-time leader in video rentals. REUTERS/Rick Wilking (UNITED STATES - Tags: BUSINESS)
A Sports Authority store is shown in Encinitas, California on March 2, 2016. Sports Authority Inc. said it had filed for Chapter 11 bankruptcy protection and hired liquidators to begin closing up to 200 of its 463 locations. REUTERS/Mike Blake
Customers walk into the Hollywood Video store that is scheduled for closing in Springville, Utah, U.S., on Wednesday, May 12, 2010. Movie Gallery Inc., the owner of Hollywood Video stores, plans to shutter operations and liquidate assets after filing for bankruptcy for the second time since 2007. Photographer: George Frey/Bloomberg via Getty Images

Helgesen writes that competition from athletic brands like Nike, Adidas, and Lululemon hurt Under Armour's performance.

Since it became acceptable to wear gym clothes essentially everywhere, Under Armour's competitors have ramped up innovation.

Lululemon has been aggressively designing new styles of clothing which it seems some customers prefer to Under Armour's sporty aesthetic and loud logos.

And Nike's investment in high-end footwear has challenged the success of Under Armour's Curry 3 shoe.

Helgesen writes that it's possible Under Armour has saturated the North American market and needs to turn to global customers for growth.

"With investments in global e-commerce and in the development of physical stores in key international locations, we believe that this engine will continue to spin rapidly over the next fiscal year," Helgesen writes. "However, the return on these investments will be somewhat lower than those made in UnderArmour's home market. This ultimately means that unless North American growth gets back on track, earnings will remain underpressure across the year ahead."

NOW WATCH: Here's what that square patch on your backpack is actually used for

See Also:
Sears is laying off workers to stay in business
One of Starbucks' biggest strengths is becoming a huge problem for the chain
Starbucks is facing a huge crisis — and the CEO refuses to say how he's going to solve it

SEE ALSO: An anti-Trump movement is calling for the boycott of these retailers

Follow Us: On Facebook

Read Full Story