Under Armour has cooled off a bit since its stellar 2016, which was highlighted by innovation and compelling products. But industry experts differ in their opinions on how bright the athletic label’s future is.
In a note Tuesday, Susquehanna Financial Group LLLP analyst Sam Poser downgraded the brand to negative — from neutral — citing poor brand distribution decisions, adding that he sees “no fundamental recovery in sight.”
“Despite ongoing evolution within the ranks of UAA’s senior management, we believe, based on proprietary checks and our industry experience, that Under Armour’s brand position will continue to weaken before it is clear if it can be salvaged,” the analyst wrote.
In August, the company let go of 2 percent of its workforce, or 280 employees, as part of a restructuring plan. And in October, on an earnings conference call with investors, Under Armour CEO Kevin Plank acknowledged the brand’s struggles, which he said included the consequences of aggressive expansion, not having a strong price-value proposition across footwear and failure to differentiate itself enough to current consumers.
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Concerning product, Poser suggested Under Armour would benefit from removing its merchandise from retailers such as Kohl’s, DSW and Famous Footwear. (All three retailers started carrying the brand in 2017.)
Matt Powell, The NPD Group Inc.’s senior industry adviser for sports, agreed that a shift in retail strategy is needed.
“They’ve got to develop a relationship with retailers who have a more of a sportswear-driven consumer — less the sporting goods retailers and more the mall-based retailers,” he told Footwear News.
The performance-driven brand, according to Powell, needs to increase its focus on sportswear, which is the athletic market’s hottest category.
“Their footwear line is really focused on performance as opposed to sportswear, and the consumer is telling us they don’t want performance footwear as fashion,” he said. “If you’re running, if you’re really playing basketball, you’re buying a performance shoe, but you’re only using it for that purpose. You’re not wearing it as sportswear.”
Currently, the Curry 4, a performance look, is on the brand’s best-seller list for men via Underarmour.com. But for women, it’s a casual model that’s leading the way: the Threadborne Slingflex lifestyle-inspired runner.
In its Sportstyle offering, there are just 12 silhouettes for men — including eight that are on sale. There is no Sportstyle category for women, although there is a section devoted to lifestyle sneakers on the website.
Despite the types of footwear Under Armour is delivering, geared toward a consumer that isn’t dominant in the marketplace, some retail store owners aren’t as critical of the brand. Ankur Amin, who co-owns Long Island, N.Y.-based Renarts and two Extra Butter doors in New York, believes Under Armour’s business is healthy.
“As a business, they’re great. They have a lot of reach, their distribution is on point,” Amin said. “The brand isn’t necessarily working with the fastest consumer right now, but I was in Texas over the holidays, and people were wearing Under Armour all over the place.”
Amin did note, however, that the brand needs to diversify its footwear portfolio.
“They’re not appealing to the fast consumer. The Extra Butter consumer doesn’t want too much of Under Armour stuff at all, and their experiments with trying to have a boutique line didn’t pan out so well. In that case, they have some work to do,” Amin said. “In Renarts, it works in pockets. As a basketball performance shoe, it does work; doesn’t work outside that space, doesn’t work in lifestyle.”
Powell also believes Under Armour’s overall business is in decent shape.
“Under Armour’s brand strength is fine. I don’t think the brand has been tarnished in any way,” Powell said. “What they have is a product problem, and that’s fixable. My gut is that this transition won’t be easy, but it is very doable and they’ll be successful at it.”
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