Dive Brief:

• Under Armour tempered growth forecasts, sending the athletic apparel retailer's stock down 16% to $31.90 in pre-market trading Tuesday morning.

• “While we expect to continue to significantly outpace the apparel industry, the growth rate going forward will be less than expected from our Investor Day in 2015,” Under Armour said during prepared remarks on its third quarter earnings call, The Wall Street Journal reports.

• Under Armour's Q3 earnings mostly beat expectations: Net income increased 28% to $128.2 million, up from $100 million in Q3 last year, and Q3 diluted earnings were 29 cents per share, up from 23 cents per share a year ago and beating FactSet analyst expectations of Q3 adjusted earnings of 25 cents per share.

Dive Insight:

With number three Adidas close at its heels in its push to regain the number two spot in the competitive sports gear space, Under Armour reported another quarter of revenue growth Tuesday — its 26th consecutive quarter of growth above 20%, according to retail research agency Conlumino — but analysts see some trouble ahead, especially in North America.

Sports Authority’s bankruptcy likely took a toll in the third quarter, and there are indications that UA must step up in categories like women’s gear and footwear, according to Conlumino retail analyst Carter Harrison.

“On its own a moderation in the tempo of North American growth could be dismissed as a blip,” Harrison wrote in a note emailed to Retail Dive. “However, given that it is accompanied by very weak profit growth — operating income in North America grew by a paltry 0.6% – and a continued rise in inventories, it suggests that a slowdown is afoot. This is especially so as the dip came during the 'summer of sport,' which Under Armour actively participated in by kitting out the USA gymnastics team at Rio and by marketing its involvement with strong advertising. Against this backdrop we would have expected a somewhat better outcome in North America.”

Under Armour reported Q3 revenue of $1.47 billion, up from $1.20 billion in the third quarter last year and above the FactSet consensus expectation for $1.45 billion. Under Armour held its full fiscal year outlook steady at net revenue of $4.925 billion, essentially in line with FactSet expectations for $4.93 billion: Q3 wholesale net revenue grew 19% year-over-year to $1.01 billion, up from to $850 million last year, while its Q3 Direct-to-Consumer net revenue grew 29% year-over-year to $408 million, up from $316 million in the prior year. 

North American Q3 net revenues rose 15.6% year-over-year, and international net revenues in the period grew 74% year-over-year, or 80% on a currency neutral basis, Under Armour said. Within product categories, apparel net revenue in the quarter rose 18% to $1.02 billion, up from $866 million year over year, led by growth in men's training, women's training, golf and team sports. Footwear net revenues in the quarter rose 42% to $279 million, up from $196 million in Q3 last year, driven by strong growth in running and basketball.