Dive Brief:
- Nearing the end of a tumultuous year for Under Armour, the brand outlined its turnaround strategy to investors this week. It focuses on four core pillars: product, story, service and team, according to a company press release.
- The brand’s ambitions include improving merchandising and go-to-market processes, developing “transformative innovations” in product, redistributing marketing investments, embracing Under Armour’s “underdog positioning” in storytelling and pursuing market-specific strategies in its core regions.
- At the same time, Under Armour reiterated its full-year outlook, which calls for revenue to fall by double digits and operating loss to fall between $176 million to $196 million. That forecast includes a 14% to 16% decline in North America.
Dive Insight:
After Under Armour’s surprise CEO switch earlier this year, founder Kevin Plank on Thursday said he was delighted to back in the top spot presenting to investors after six years without an investor presentation.
“As the CEO of Under Armour, it’s easy for me to say this word: I’m just happy,” Plank said. “I want you to meet our team. I want you to be able to look into the whites of the eyes and see and feel the energy of this brand — of what we believe is possible.”
The company discussed many things it’s talked about all year, which include investing in the brand’s positioning and storytelling, improving the assortment (Under Armour already cut 25% of its SKUs in May) and winning over the 16-to-24-year-old shopper. Most of the brand’s new products likely won’t come to market until 2025 and won’t scale across its distribution until 2026, according to BMO Capital Markets analyst Simeon Siegel, but they could be opportunities to grow in certain categories and improve segmentation.
Plank, for his part, said the brand was refocusing on the purpose of a product before making it.
“What a product is, what a product does and how that product will make you better — and if we can’t answer those three questions for every product Under Armour makes, we probably shouldn’t make it,” Plank said. “You have to earn the privilege to be an Under Armour product.”
The brand is also planning its “most significant” marketing effort to date in 2025 and has been bringing in new leadership faces all year. Notably, in August, Chief Consumer Officer Jim Dausch left Under Armour and longtime Adidas veteran Eric Liedtke joined the company as head of brand strategy. Another Adidas veteran joined in September to lead commercial for Europe, the Middle East and Africa.
The brand needs to fix not just its brand, but also a string of declining sales and a North America region that is suffering. Under Armour grew by double-digit percentages throughout much of the 2010s, but its growth tapered off in 2017 and the brand has been relatively stagnant since. Even with a turnaround plan, it will take time to see results.
“The event was light on quantitative details (the CFO did not even make a formal presentation, except to reiterate Q3/FY guidance), but it did provide a helpful qualitative look at the company's key initiatives,” Needham analyst Tom Nikic said of the investor day. “The core strategies make sense (drive product innovation, make the brand more premium-focused, etc.), but it remains to be seen if they can execute on these opportunities, and we believe it will take until Fall/Winter '25 before we have clear evidence of a turnaround.”
