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Under Armour Troubles

JB

JB

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2nd consecutive quarterly loss this one will result in 2%-5% of employees being let go. Sadly there are rumors out there that this is just the beginning and there are more issues to come including a board that is not happy at all with the leadership of Plank. They have incredibly high turnover at the executive level and some point to his style as the reason.

David McCreight – Joined as President in '08, resigns in '10.
Wayne Marino – Named in COO in '08, resigns in '11.
Brad Dickerson – Appointed CFO in '08, resigns in '15.
Terdema Ussery – Departs as President of Global Sports in '15.
Henry Stafford – Appointed President of N. America in '13, resigns in '16.
Robin Thurston – Joins in '13, departs in '16 from Chief Digital Officer role.
Chip Molloy – Appointed CFO in '16, departs in '17.

Speaking to one person recently that has worked closely with them, Plank has done an incredible job at getting the company where it is, but the next hurdle is one of the biggest they will face in growth and stability is important and he is not the person to get them there.

Stock price this year has gone from roughly $44 to $19 as of today.

Speaking to a few in the apparel industry they point to a number of things including their dependence on footwear and now having to play against the giants in the industry overall, but also that there are some QC problems that still exist. Seems that pucker, uneven neck and hem lines, etc. I can't point to that personally as I do not wear their apparel much, but know that a lot of brands fight these issues and overcome them.

Golf has been a bright side for them and looks to continue that trend as they entered the market and grew quickly and while leveling off happens for all with huge increases from entering the market, their fans continue to support the brand.

So will all of this said, if you were in charge, what would you do to right the ship?
 
I can't say that I have the answers, but I imagine your sources are spot on in terms of diagnosing that the issue is leadership. My cousin, who has worked for UA for a number of years, has had an interesting experience there.
 
I'm surprised at the struggles with their gains of market share in the ncaa

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Board has to remove Plank, hire a CEO that can rally people around a clear vision and bring in a strong CHRO to change the culture and hire the right people.
 
Shows how much I know. I thought they were doing well. I guess I'd minimize lines and try to reorganize the roles


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Under Armour Troubles

I think at at $19 a share that UA is a buy, but they have some issues. The fact that they have become more dependent on athletic shoes to drive revenue is troublesome, because athletic shoes is a way lower margin segment than apparel. I think the longer term outlook for UA is still good, as they have done a great job positioning their brand with the youth demographic, my nephew is 8 and he and all of his friends wear nothing but UA (small sample size but I see UA all over the place in that age group).

How would I fix it?

Lower the overall investment in basketball shoes, the basketball shoe craze is over, and their isn't a player in the NBA currently like a MJ that can be the brand in and of his self. UA thought that Curry was that type of brand, but he is not one to move the dial globally.

Invest capital into winning College sponsorships, NCAA licensed apparel is a big business, UA doesn't sponsor enough schools to corner a large enough percentage of that market. Notre Dame doesn't carry the same weight that it used to (ask NBC about that). If you sponsor a team, you can make their gear, find more teams to sponsor. This is a high margin segment that they are missing the boat on. Ask Nike now much Alabama crap they sold last year. Need to get a big fish, an Alabama, Texas, LSU, USC, Michigan, etc would be a good place to start (all of these listed are Nike schools).

Process- They have to get QA under control. UA is a higher price point offering than their competitors. This price point is fine if your product is considerably better, but with the QA issues, it's hard to make that case. This was UA's original hook, UA's product cost more than Nike's but it performed better and was a better quality. Get back to basics on the QA process, and make sure that you aren't eroding your key selling point.

I believe that they have done a great job with their Golf offering, but the rest of the lines need some help.


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Really surprising the brand is super popular in the military. It seems though that if there is trouble in the company the leader is responsible for everything that happens or fails to happen...might be time for a change.
 
I don't know the first thing about running an apparel business.

I doubt the QC is the issue as I've never personally heard anyone complain about their UA gear not lasting or having problems.
Sounds like Plank is no fun to work for and needs to be outed or they have a terrible hiring department.
 
JDax said:
Norte Dame doesn't carry the same weight that it used to (ask NBC about that).
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That's not true at all. ND is in the top 5 of collegiate licensing every single year, usually top 2 or 3 with Texas and Alabama.

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ArmyGolf said:
I doubt the QC is the issue as I've never personally heard anyone complain about their UA gear not lasting or having problems.
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This is one of the examples of puckering. This should not happen at this type of price point. This is not my apparel, just one of hte many examples around the net when they talk about the QC issues.

img_3558.jpg
 
#1 - fix the sizing so it is uniform across all the lines. I buy their T-Shirts in large, and there can be a huge difference in sizing if you buy across 2 or 3 different lines.

#2 - Need more innovation. You cannot rely on sales of hoodies with the same logo on the middle of the chest. Sure, they have increased, and now decreased the size of the logo, but eventually you stop buying if the core product is always the same.

#3 - I like the golf apparel offerings, but would buy much much more if the pricing on the shorts and golf shirts came down, if even just slightly.
 
I had no idea they were struggling, I honestly thought they were climbing to the top successfully.

I don't know what should be done in a situation like that, but voting Plank out is obviously the first step.
 
Under Armour Troubles

ozzman said:
That's not true at all. ND is in the top 5 of collegiate licensing every single year, usually top 2 or 3 with Texas and Alabama.

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I knew that I was going to upset a few Notre Dame fans with that comment. That wasn't my point, I'm aware that Notre Dame sells a lot of gear, and ranks highly.

If you look at the Top 5 UA sponsored schools: Wisconsin, Notre Dame, Auburn, South Carolina, Maryland.

Then compare that to Nike's Top 5 schools: Ohio State, Texas, Michigan, Alabama, & LSU

Who is going to sell more gear? Nike by far, and it is not close even with Notre Dame in that UA camp.

In fact, UA only sponsors 9 of the top 65 NCAA programs. UA schools include: Wisconsin, Notre Dame, Auburn, S. Carolina, Maryland, Northwestern, Texas Tech, Utah, and Boston College. My point is that this is a big miss on their part and they need more schools. Notre Dame isn't enough to get a big enough share of a high margin segment, I stand by that assessment.

Notre Dame is a good school to have in your portfolio, but, UA needs more good teams in their portfolio.




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JDax said:
I knew that I was going to upset a few Norte Dame fan with that comment. That wasn't my point, I'm aware that Norte Dame sells a lot of gear, and ranks highly.

If you look at the Top 5 UA sponsored schools: Wisconsin, Norte Dame, Auburn, South Carolina, Maryland.

Then compare that to Nike's Top 5 schools: Ohio State, Texas, Michigan, Alabama, & LSU

Who is going to sell more gear? Nike by far, and it is not close even with Norte Dame in that UA camp.

In fact, UA only sponsors 9 of the top 65 NCAA programs. UA schools include: Wisconsin, Norte Dame, Auburn, S. Carolina, Maryland, Northwestern, Texas Tech, Utah, and Boston College. My point is that this is a big miss on their part and they need more schools. Norte Dame isn't enough to get a big enough share of a high margin segment, I stand by that assessment.

Norte Dame is a good school to have in your portfolio, but, UA needs more good teams in their portfolio.




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Your comment was that ND was a dying brand, and that is false based on numbers, regardless at the W/L record of the football team. Of course having ND only isn't going to give you a huge slice of market share overall, but getting a top 5 school is definitely a great start. Also, Wisconsin is probably 3rd or 4th in the big 10 after the big two you listed for Nike. With Adidas decline, I thought that UA was doing a good job trying to move in and start clawing at the market share. They definitely need more schools, and other big schools, but they just started a couple years ago.

I'm surprised at the company's reliance on shoes and the overall QC that JB showed. Everything I've had from UA has been good quality.
 
lol at ND fans. Simmer down, this is about the brand, not about a college sports program not living up to the hype anymore.

Just to get some facts going in, adidas has had a brief resurgence and here is a look at the two companies as of a couple of months ago. adidas resurgence many point to their marketing in the US and the popularity of the originals line.

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Running a business of this size is way over my head. You have to have a leader that people want to work for. If the dude has a swollen head and rules with an iron fist there will be employees that will underperform and become stale. It sounds like the team has stopped listening, time to step down. I've got 1 UA golf shirt and I'm not too impressed with fit and finish. Collar won't lay flat and one sleeve is slightly twisted. Something I wouldn't expect from an $70.00 shirt. My youngest son is 12 and I swear him and his friends wear UA exclusively.
 
On CNBC this morning they are saying that the restructuring will cost the brand over 100 million. That seems high to me, but the contracts and leases apparently need to get fixed for long term health.
 
Wow, I'm actually shocked. Everywhere I go, there's still a high schooler, decked out in UA gear.

To right the ship, I would do two things. First, I'd go back to my target market. Don't ask me why, but that seems to be high school sports. Or at least that's what I see the most of. I mean, were coming right up on high school football season, and I'm pretty sure all those fancy padded garments aren't cheap. Might as well market that.

Then there has to be stability in the company. You can't have that much turnover and not experience turmoil on the sales and production side of things.

~Rock
 
I'm not really sure how they come back in this "what have you done for me lately" society. Shoes though, they were a terrible idea IMO. Maybe a change in leadership does it, maybe not. Quality has to be there at the price point they sell at, I've never had a issue with that personally, but if it is an issue it's needs fixed ASAP.
 
As a consumer I can say that the reason I own zero under armor (aside from socks) is that for the price I prefer Nike or Travis Mathew. I think if UA stuff was just a little less expensive there's a good chance I'd own a ton of it as I like their designs and logo.
 
Didn't see this coming but then again I don't follow stuff like this that close
 
I would have thought UA was doing well. They have some big names tied to the brand (Curry, Spieth, Brady, Harper) but those stock price drops are alarming. One thing I'd do is fix the quality issues as mentioned and that includes sizing. Some of their clothes, mainly shirts, just don't fit true to size.
 
Not a apparel expert by any means, but regarding the NCAA Licensing, UA has certainly pushed. They lost out on the Texas and Michigan bids to Nike. They just added UCLA and it will continue to take time to gain share; Adidas has faded there some and UA has benefited from that.

I'm also a bit biased about Plank seeing as he does a lot for my alma mater, but no one is infallible. I will say I do love UA golf polo's and wear them all the time. Much better product than any other golf polo I've worn, but to each his own.
 
This is a multi headed problem. First, several of their larger customers are out of business or struggling. The Sports Authority was one of their largest customers and a lot of their goods were there on consignment as was the case with many others vendors. Then their footwear program has never gotten the traction it needed. The shoes are ok at best.They decided to sell some of the big box shoe chains that they had not before in an effort to shore up the missing income from the fading sporting goods channel. But the shoes are not up to par with Nike and Adidas who is hot. Similar to what JB stated there has also been massive turnover in the footwear design area. They bought several companies in the technology space versus licensing the technology and it has backfired. Just not a pretty picture. Sometimes you look in the closet or the drawer and you see a lot of the same brand and you just want something else.
I think they have to scale back on the number of categories they want to play in and be great at a few things instead of ok in a lot of things.
 
I think I take a step back and look at the shoe side of things (non golf) how much is that generating the revenue versus cost to produce.

I look at the specialty lines like the one that Dwayne Johnson has. It appears to be selling well, but if it isn't scale that back.

Other stuff I look at are the accessories and college sponsorship. Do you need to have UA branded sunglasses, wireless ear buds, etc... Also with the college teams, how is that translating into revenue. Again another area to look at and see if it makes sense.

now these are all "arm chair" thoughts from the sideline and i'm not as smart as others, but stick to what you do best, build on the golf lineup that seems to be doing well.
 
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