Dive Brief:

• Under Armour on Tuesday reported that third quarter revenue rose 2% to $1.4 billion (3% currency neutral), as wholesale revenue rose 4% to $914 million and direct-to-consumer revenue was flat at $465 million.

• Operating income in the quarter bounced by 91.3% to $118.97 million while net income reached $75 million, according to a company press release. Inventory shrank 1% to $1.2 billion. The company added that for 2018 it expects to incur some $200 million to $220 million in pre-tax restructuring and other charges connected to its restructuring plan.

• For the full year, the company expects revenue to rise about 3% to 4%, reflecting a low single-digit decline in North America and international growth of about 25%. 

Dive Insight:

Unlike rival Nike, Under Armour is still struggling to recover at home. 

Under Armour's third quarter North America revenue fell 2% to $1.1 billion while its international business, just 24% of total revenue, rose 15% to $351 million. 

That's worrying, and reflects several challenges for the activewear company, according to GlobalData Retail Managing Director​ Neil Saunders. Those challenges include a slowdown in athleisure sales that is hurting many players and, in footwear, a loss of "significant market share to Nike, which has been more innovative and focused with its product strategy," Saunders said in comments emailed to Retail Dive.

Perhaps more problematically, Saunders said the Under Armour brand is "still unfocused and confusing for customers, especially on the product side." He described the company's assortment range as "a hodgepodge with no clear focus or specialism."

That's made all the worse by emerging niche brands with clearer brand propositions, Saunders added. That includes Lululemon's footwear and men's business, and Gap's new Hill City men's activewear line. "Under Armour is caught in a difficult position," Saunders said. "It has neither the brand power or muscle to be a Nike, but nor is it nimble or niche enough to generate the strong appeal of a smaller label," he said.

Adding to its difficulties is the fact that "both online and mobile experiences for UAA are average," while the "store experience is basic," according to a note emailed to Retail Dive from Jane Hali & Associates. 

But the company has made progress salvaging margins, a necessary step for the long term that has come at a cost, according to Instinet analyst Simeon Siegel. "We have been noting a clear focus on recovering margin and focusing on the health of the business, and with inventory clean, and GM up, we believe the company is doing just that," Siegel said in a note emailed to Retail Dive. "However, we have also been flagging this focus on margin would likely come at the expense of meaningful top-line growth, which appears to be happening as well."

Getting out from under its troubles is going to be a long haul, according to Saunders​. "Given how competitive the market is and how difficult it is to solve brand-related issues, we are not particularly confident that Under Armour can easily maneuver out of its current difficulties," he said. "We foresee more pain to come before things get better."