Under Armour Looks on the Mend With CEO Aiming to Widen Appeal
(Bloomberg) -- Under Armour Inc.’s slump may be nearing its end.
The share of analysts with a buy rating on the stock rose to nearly 30% this month -- more than double the rate in October -- as Wall Street gains confidence in the turnaround plan of Chief Executive Patrik Frisk. Since taking over the top job a year ago from founder Kevin Plank, he’s cut costs and sold a fitness app purchased five years ago when the company’s stock was double its current price.
For many companies in the athletic space, the pandemic has been a boon, with consumers around the world loading up on comfy clothes such as yoga pants and sweats. Over the past 12 months, competitors Nike Inc. and Lululemon Athletica Inc. have seen sales rebound, and even surge, while their shares jumped more than 30%.
Meanwhile, Under Armour lost market share in the U.S., its largest market by far, as its stock sank 16%. This only increased concern that the company would continue to struggle after years of robust growth. That pushed Frisk to revamp operations and branding during the pandemic, according to Simeon Siegel, a retail analyst at BMO Capital Markets.
“That meant a critical focus on re-elevating the brand, a critical focus on price points and re-establishing what the brand stood for,” Siegel said.
Part of that shift is trying to widen Under Armour’s appeal. Founded by Plank as a brand dedicated to making workout shirts for football players, it became a hit mainly in America’s suburbs. Its foray into the much more urban sport of basketball came later. And while it’s had success with shoes tied to NBA star Steph Curry, it hasn’t broken through to become a fashion athletic brand that would gain it entrance to a much bigger market.
One way Frisk is trying to get Under Armour to win over consumers it’s struggled with is by telling better product stories, including a focus on diversity, equality and its home city of Baltimore, which has a majority Black population. Its first project is a footwear and apparel collection that features the photography of Devin Allen, a Black employee who took the widely circulated black-and-white 2015 Time cover photo of a protester in the aftermath of Freddie Gray dying while in police custody.
The line was developed with lots of input from the company’s Black employee resource group, a first for Under Armour that could be a model for future launches, Frisk said in an interview. It will be sold online and at Under Armour stores beginning on Feb. 5 as part of the company’s honoring of Black History Month. The products, which include sneakers, hoodies and t-shirts, feature shots of African Americans around Baltimore.
“Historically, Under Armour has not necessarily been forthcoming with taking a view on certain aspects of things that were beyond a product,” Frisk said.
Competitors have long used their marketing arm to lean into topics around race and gender, while Under Armour has mainly stuck to touting the performance attributes of products.
“This is a little bit of a departure” for Under Armour “because they have really not depended on storytelling,” said Matt Powell, an analyst for NPD Group. “It’s been much more about the performance characteristics of a product that will keep you warmer or cooler or dryer. This really feels like one of the first times they actually departed from that and are more interested in telling stories about who Under Armour is.”
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