Under Armour’s Underwhelming Earnings; Trump Tackles Big Pharma Prices; No Easy Riding for Harley These Days

Chink in the armor…

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Under Armour released its quarterly earnings and they were pretty disappointing. Besides the company’s poor performance, it also bummed out Wall Street with a dimmer outlook. Growth for the company had regularly surpassed a 20% rate. But alas, that rate has come to a screeching halt and Under Armor warned us that a more modest growth rate of maybe 12%, with revenues of $5.4 billion, should be expected for 2017. Analysts had been holding their collective breath for a $6.8 billion revenue figure. Oh well. Maybe in 2018. Shares of the athletic apparel company had already taken a 39% beating in the last year. But after unveiling its latest figures, they dropped even more.  CEO Kevin Plank blamed the ever growing nuisance – for him, anyway – of competition. He also admitted that maybe the company should have focused on offering more high-fashion apparel – which seems to be all the rage at the moment – instead of relying on its basics which didn’t perform as hoped. Plank also blamed the slew of retail bankruptcies of brick-and-mortar stores that carried Under Armour merchandise. Unlike Nike and Adidas, who have a lot of their own stores, Under Armour does not and the inability to get merchandise onto shelves definitely took a nasty bite out of the company’s earnings, especially since 85% of Under Armour’s revenue comes from North America. So those closures really hurt. Last but not least, major promotions that took place too early in the holiday season put a crimp in Under Armour’s numbers as well. Profit dipped to $105 million, adding 23 cents per share, when last year it pulled down almost $106 million taking in 25 cents per share. Revenue may have been up 12% to $1.31 billion, but estimates were pegged for $1.41 billion. By the way, in case you weren’t aware, Plank was among the group of business leaders who met with Trump earlier in the month and pledged to bring more jobs to the U.S.

Pill-tastic news…

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Image courtesy of Ben Schonewille/FreeDigitalPhotos.net

Trump held a special meeting today in the Oval Office with eight lucky guests hailing from the big pharmaceutical companies and pharmaceutical industry lobbying firms.  Among the eight attendees were representatives from Johnson & Johnson, Merck & Co. and Eli Lilly & Co, which happens to be based out of Vice President Mike Pence’s home state of Indiana.  Trump urged them to move manufacturing stateside and promised to ease regulations for them if they do. Just like with the auto industry, Trump wants to redo trade policies for this industry as well so that foreign countries pony up their fair share of drugs manufactured in the U.S. In true Trump fashion, the President remarked how foreign countries are “freeloading” on the U.S. because they put price limits on what their citizens can be charged for drugs. He also wants to streamline the approval process, boost production and get prices drastically lowered on drugs.  Shares of most of the companies represented at the meeting rallied today. In the meantime, we’re still waiting on Trump’s announcement for his FDA pick. But he promises that it’s someone “fantastic.” Of course it is.

Fast lane to nowhere…

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Image courtesy of saphatthachat/FreeDigitalPhotos.net

If you’ve ever thought about purchasing a Harley-Davidson motorcycle, but haven’t quite got around to buying one, now might just be the time. A surplus of 2016 models has got the iconic bike maker placing big discounts on its inventory, hoping to sell them off in order to bring in the new and improved 2017 models. Profit for Harley-Davidson came in at $47.2 million, which was actually 12% higher than last year’s $42.2 million. Too bad it all goes down from there. Sales in the U.S. were down almost 4%, but at least the rest of the world helped offset a bigger loss with a 2.3% increase in international sales. As for 2017, the company is expecting things will stay the same, as in flat. In fact, the company plans on shipping about 20% less than bikes than last year. The motorcycle industry, as a whole, has been experiencing a decline since May. Part of that has to with the fact that Harley’s dedicated fans are getting older and younger riders aren’t cropping up to fill that void. Hence, Harley-Davidson has a plan intended to draw in more potential bikers, or as Harley-Davidson CEO Matt Levatich calls it, “building riders.” With this initiative, he hopes he can attract a new, and highly diverse generation of Hog enthusiasts.

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