Can Under Armour Pull Out of Freefall?

Not long ago, Under Armour brand was the darling of the sports retail market. The company was making a major push against industry behemoths Nike and Reebok, by winning major celebrity endorsements and grabbing market share across multiple market segments. Based on the performances of those top tier celebrity endorsements, Under Armour should be riding a wave of unprecedented success. In the NBA, Steph Curry and his Golden State Warriors have the best record in the league. They are absolutely destroying people, and people are already saying Curry should be a shoo-in for MVP.

Meanwhile, in the NFL, Tom Brady is having one of his best seasons ever. Even setting aside the Super Bowl, Brady is a huge name in sports, coming off a four-game suspension to lead his team to a season no one outside the New England locker room dared predict. Apparently, though, none of that matters. Those guys are winning, but Under Armour has not been able to maintain its growth. Earnings missed forecasts last quarter and the company admits it won’t hit 2017 projections either.

Under Armour Public Relations

And if that wasn’t bad enough, the company is dealing with vague reasons for leadership turnover as well. The CFO recently stepped down for “personal reasons” which is typically code for a top executive becoming a scapegoat for poor performance. Trouble in retail, in profits, and in leadership created trouble on Wall Street for the brand, which saw share value drop about 25 percent recently. Some are hinting that CEO Kevin Plank might be distracted. Plank was one of several high-level leaders tapped to join a business advisory group for President Trump. For his part, Plank told CNN the issues were the result of “numerous challenges and disruptions” in recent months. That, some say, sure sounds a lot like distraction.

Others say that’s ridiculous. The company is just responding to a massive market push coupled with changing dynamics in the sportswear industry. Retail sales, in general, are down, so Under Armour may have picked a bad time to make a run. While some industries have made an easy transition to a hybrid onsite and online sales environment, athletic wear and equipment have not yet managed to find its footing in this brave new world.

Many sports-related brands are struggling to make sales, not just Under Armour. It just so happened that UA had less of a footprint and a smaller built-in fan base. They are struggling to find customers who are already accustomed to buying other brands in a market where everyone is buying less of everything. Will they find a winning formula to expand their market base, increase sales and pull out of this freefall? Should be interesting to watch.

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