Scoop: Under Armour's Comeback Struggle Continues, but there's a Silver Lining
Online sales of Under Armour's products plummet by 20% as the company scales back on discounts
Almost a year after CEO Kevin Plank's reascension, Under Armour's sales are still on a slippery slope. The activewear giant reported a dismal 5.7% dip in net revenue during Q3, as per Thursday's press release, with the total Q3 revenue reaching a staggering $1.4 billion. Notably, the brand's North American region - its biggest market - took an 7.8% hit, diving to $844 million.
The decline in Direct-To-Consumer (DTC) revenue was significant, plummeting by 9%, mostly due to a 20% drop in e-commerce sales. Conversely, wholesale revenue suffered a minor setback, descending just 1% to $705 million.
Plank, on a call with analysts, expressed his plans to expand wholesale accounts in 2025, primarily with boutique retailers. Under Armour has embarked on a mission to reclaim its lost shelf space and revitalize its brand image.
The Fickle Landscape of Under Armour's Sales
Although Under Armour's revenue drops in Q3 exceeded expectations, the brand modestly increased its full-year guidance. Plank remains optimistic about Under Armour's progress, eyeing the brand's metamorphosis with anticipation.
Since Plank's reinstatement, the company has faced layoffs and shuttered a California distribution center, signs of the comprehensive renovation underway. Neil Saunders, GlobalData's Managing Director, mused that Under Armour's sales woes could be attributed to its strategic overhaul and dwindled appeal for consumers in a fiercely competitive market.
A New Era: Innovation and Collaboration
Plank revealed that Under Armour's focus on high-end products is yielding positive results, bolstered by recent strategic appointments, including a new Chief Product Officer, a Brand Strategy Head, and Regional Leaders. Additionally, the iconic fashion designer, John Varvatos, joined the team as the Chief Design Officer in 2023.
While the outcome of these efforts will become apparent later this year or early next, Plank expressed his frustration with the industry's slow pace. He yearns for a world where product development happens at the speed of light.
Expanding Horizons: Wholesale and Marketing Push
Under Armour continues to fortify its relationships with retail partners, such as Kohl's, particularly beneficial for female consumers. The brand ensures that none of its accounts dominate its sales, and it aspires to layer on better and best distribution partners for its premium products.
Heavy marketing investments are being made, with a particular emphasis on its loyalty program, which now boasts an impressive 17 million members. The brand aims to transform the loyalty program from a discount-centric venture to a thriving community, fostering a closer connection with consumers.
So far, tariffs have not posed a major threat to Under Armour, given that the brand sources a minuscule amount of its product from China, Mexico, and Canada.
The Road to Recovery: Micro Doses of Marketing, Innovation, and Engaging Storytelling
Under Armour's revival plan is built on three pillars:
- Regaining Shelf Space: The brand will employ "micro doses" of targeted marketing, using software algorithms to reach specific demographics optimally. Moreover, it will focus on innovative products that can captivate consumers and reclaim lost shelf space.
- Rebuilding Brand Equity: Innovation and performance will be at the heart of Under Armour's strategy, aimed at restoring consumer trust and rebuilding the brand image. Additionally, compelling storytelling will be used to resonate with consumers on a deeper level, emphasizing the brand's mission and values.
- Product Development: Innovative products, integrating technology like adaptive materials or smart fabrics, will be a focal point for the brand. Collaborations with other brands and tech companies will also be pursued, increasing the appeal of its products to a wider audience.
These strategies will empower Under Armour to rejuvenate its brand presence, enhance its product offerings, and ultimately, regain consumer trust and recuperate lost ground.
Space technology and AI could play a vital role in Under Armour's product development as they aim to create innovative products integrating adaptive materials or smart fabrics. The brand may collaborate with tech companies to enhance its product appeal to a wider audience and rejuvenate its brand presence. In the realm of finance and business, Under Armour intends to use software algorithms for targeted marketing, seeking micro doses of effective advertising to reach specific demographics.
