Under Armour, Underperforming, Is Ready for a Reset Says CEO

 

Can Under Armour, underwhelming investors and consumers alike, pull off a turnaround? Founder and CEO Kevin Plank thinks so, and after the company reported its first quarterly sales decline in at least 12 years, he vowed to “reset” the brand and the company in an attempt to return to the 20-percent-a-quarter growth that it enjoyed for more than six years.

Under Armour faces challenges, including in its C-Suite. On Wednesday came news that its CMO, Andrew Donkin, who only joined in September 2016, and Pamela Catlett, SVP and GM of women’s and youth categories, are leaving the company. That comes in the wake of recent departures by its president of sport fashion, Ben Pruess, and Kip Fulks, a co-founder and deputy to Plank.

The company also cut its immediate growth forecasts as Plank admitted he’d been “a big braggish” about its past accomplishments. It faces troubles in the U.S., its home market, as well as teething paints from rapid growth in recent years.

Under Armour has been hit by more competition in athletic apparel, which has pressured the brand despite growth in the category overall. Under Armour isn’t big in footwear, and North America is its main market, so it can’t be offset by global sales.

Its fitness tracker business is soft, and it’s now discounting those devices in favor of improving software in its apps. Its high-end line, UKAS, has struggled, and now it will be integrated across categories such as basketball, running and women’s, instead of existing as a standalone segment.

“This is about more than external factors—it demonstrates issues with the brand and its proposition,” Neil Saunders, managing director of GlobalData Retail, told Retail Dive. “Especially so since other brands and retailers, including Lululemon, have not posted such calamitous [sales] figures.”

Saunders and other analysts asserted that Under Armour’s other problems include an under-performing online experience compared with its on-point brick-and-mortar store experience and merchandising; over-indexing in male vs. female consumers; and a tie-in with Kohl’s that may have devalued the brand in the eyes of some consumers and alienated other retailers.

In the wake of the take-the-knee NFL players’ protest, some consumers have boycotted UA (along with Nike) as an official sponsor of the NFL and some basketball players.

.@UnderArmour stands for the flag and by our Athletes for free speech, expression and a unified America.

— Under Armour News (@UAnews) September 23, 2017

Plank promised to implement other changes, including co-designing of its UAS line by celebrity collaborators and a further tilt toward direct-to-consumer sales—much as Nike has been doing—as the wholesale sportswear business slows.

All in all, Plank told analysts on the quarterly conference call, the time is right for “a reset for our business and our brand as we try to operate as a bigger company.”

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