Geoffrey Smith 

Investing.com — Under Armour stock fell 10% on Friday in Premarket after it joined other sportswear companies in warning about the big impact of Covid-19-related disruptions in 2015.

According to the company, margins as well as operating profit will be affected in the next fiscal year that begins with the. The company reported a net loss totaling $60 million in its three-months ending April. It was due in large part to the 14% decline in Asia-Pacific sales. This was in contrast to the 4% growth in North America, 18% in Europe and Middle East and Africa.

Under Armour faced stiff headwinds due to rising freight costs and other input costs. While its gross margin fell by 3.5 percentage point to 46.5% it saw an increase in selling, general and administration costs of 16%.

The company expects to see revenue rise by about 6% from $5.7billion in the next year. It also noted that its supply chain restructure will result in an additional 3% growth. Margins will be impacted by input costs, which could fall up to 2 percentage points. Meanwhile, operating income may drop from $424m to $375 to $400 million. From a baseline of 68.5c, adjusted earnings per share will drop to 63c.

Under Armour wasn’t the only clothing manufacturer that suffered on Friday. Adidas (OTC) stock fell 6.1% on Friday, as a result of a German-based company cutting its profit forecast due to a slowdown in Chinese sales. 

Adidas cut its gross margin target for the current year to 50.7% from a previous range of 51.5%-52%. 

Adidas’ China sales were 35% lower than the previous year. This was due to Covid lockdowns, but also because of ongoing pressure from western brands in China. They are trapped between investors and local sentiment about the supply chain linkages they have with the province of Xinjiang.

Premarket trading in New York saw Adidas ADRs drop by 5.4%