Under Armour Inc. sure must be glad to put 2017 in the rearview mirror.

The athletic-apparel giant on Tuesday reported that revenue in the fiscal year increased a meager 3 percent over 2016. In North America, its largest market, 2017 sales fell 5 percent from a year earlier.

Investors sent the stock up in pre-market trading, apparently pleased the fourth quarter wasn’t quite the grim finale to the year they expected. 

But Under Armour shouldn’t take a victory lap. The brand disappointed investors on several fronts last year. It botched the launch of the Curry 3 sneaker. Demand for some of its products fell in North America. And it struggled to manage the growing pains of rapid expansion, such as the supply-chain disruptions that came with rolling out new technology. 

If Under Armour found all of that hard to navigate, here’s the bad news: I don’t see much indication 2018 will be easier.

For one, the competitive landscape does not look more favorable. Lululemon Athletica Inc. has delivered stronger comparable sales growth lately, and its men’s line is on track to be a $1 billion business by 2020.

And key Under Armour outlet Dick’s Sporting Goods Inc. has ambitions to double sales of its own private-brand merchandise. Despite Dick’s recent troubles, Under Armour still relies significantly on the chain, which will increasingly be a rival:

Meanwhile, though Nike Inc. doesn’t seem nearly as bulletproof as it did two years ago, it’s still ringing up strong sales in the overseas markets Under Armour hopes to make a cornerstone of its growth.

In other words, Nike has not given Under Armour much of an opening where it badly needs one.

Neither, for that matter, has Adidas AG. Despite a tepid market for sneakers in the U.S., Adidas saw its footwear sales here increase more than 50 percent in 2017 compared to a year earlier, according to market research firm NPD Group. 

All of that underscores how hard it will be for Under Armour to meaningfully grow sales and take market share this year. The company essentially acknowledged as much with the 2018 forecast it released Tuesday. It said it expects revenue to increase at a “low single-digit” percentage rate and that North America will again see a “mid-single-digit” decline.

Essentially, the sales picture at the end of 2018 may look much the same as it did in 2017. 

Of course, there was no way Under Armour could have kept up the breakneck, newcomer’s growth rate it enjoyed for more than a decade. A slowdown is natural as a business matures. But it is worrisome that it downshifted so abruptly. 

Under Armour needs to answer some key questions: How will it fix its basketball shoe business? It plans lower promotional activity in the year ahead -- how will it execute that without alienating some customers? What product innovations are in the pipeline that could grab shoppers’ attention?

In remarks to investors several months ago, CEO Kevin Plank sought to explain Under Armour’s journey by breaking it down into chapters. Chapter 1, Plank said, was running a startup out of his grandma’s basement. Chapter 2 was an expansion into the women’s and international businesses. Chapter 3, he said, was the spectacular run of growth that followed its 2005 initial public offering.

Unfortunately for Plank, I think we now know what Chapter 4 looks like: a massive stumble by a company that didn’t quite know how to manage its rapid growth and let hubris get in the way of adapting to changing shopper behavior. 

And I’m still unconvinced that chapter is over yet.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

Sarah Halzack is a Bloomberg Gadfly columnist covering the consumer and retail industries. She was previously a national retail reporter for the Washington Post.

To contact the author of this story: Sarah Halzack in Washington at shalzack@bloomberg.net.

To contact the editor responsible for this story: Mark Gongloff at mgongloff1@bloomberg.net.

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