Inside an Under Armor store in Houston, Texas on November 3, 2021.
Brandon Bell | Getty Images
Wall Street isn’t happy about that. under armor Founder Kevin Plank will return as CEO.
Shares of the sports apparel company fell about 12% on Thursday after the company announced that CEO Stephanie Linnertz would be stepping down after just one year in the role, with Plank replacing her effective April 1. .
Following this announcement, both Williams Trading and Evercore ISI downgraded Under Armor and lowered their price targets. Williams Trading rates the company from “buy” to “hold” and lowers the price target from $11 to $8, while Evercore downgrades the company from inline to underperform and lowers the price target from $8 to $7. devalued to the dollar.
Former Lin Narz marriott international The executive, who was appointed last February, is the company’s second CEO in less than two years.
Patrick Frisk, former CEO of Aldo Group, replaced Plank as CEO of Under Armor in January 2020, but more than two years later, in May 2022. suddenly announced plans to resign.
In December of the same year, Under Armor hired her, betting that her experience building Marriott’s famous Bonvoy loyalty program and driving digital revenue for the hotel giant would make up for her lack of retail experience. , announced plans to hire Mr. Linnertz.
Since joining Under Armour, Linnertz has restructured the company’s leadership, built out its loyalty program, UA Rewards, and expanded the brand’s assortment to be more athleisure-focused with more stylish options for women. We have been focusing on changing direction to products that are unique to our customers.
Evercore ISI said in the downgrade that Plank’s return was a “clear signal” that the strategy was not working and that key performance indicators continued to deteriorate this quarter.
Analyst Michael Binetti said, “We believe the most likely scenario Planck pursues involves an effort to accelerate a return to North America and drive revenue growth. “We believe this poses a significant risk to the brand.”
Under Armor saw sales slow during the holiday quarter as the company grappled with weak demand and weak wholesale orders in North America. But these dynamics also affect competitors and represent a larger force exerting pressure on the retail industry.
Faced with persistent inflation, high interest rates, and dwindling savings accounts, North American consumers are becoming more selective with their discretionary money, cutting back on new clothes and shoes and spending more on dining out and travel.
Meanwhile, wholesalers have been maintaining tight order books in recent days after being overwhelmed by large inventories built up during pandemic-era supply chain disruptions. With inventory levels now near normalized across the industry, wholesalers are becoming more cautious with orders in an effort to maintain inventory levels while battling uncertain demand conditions.
Analysts at William Blair agreed that Mr. Plank will focus on driving revenue growth for Under Armour, which challenges the company’s claims that 2025 will be a year of cost efficiency.
“Additionally, with approximately two-thirds of Under Armor’s management team having been new to Under Armor over the past year, Mr. Linnertz’s departure poses a risk that key roles at Under Armor may change further, which could lead to , our expectations for a return to domestic revenue growth during the fiscal year could be pushed back by 2026, given the inherent product lead times if key leadership changes occur,” the memo said. is written. “That said, Mr. Plank has been heavily involved as brand chief and executive chairman over the past year, adding some to our optimism that key hires will continue to stick around.”
Neil Saunders, a retail analyst and managing director at GlobalData, said Linnertz’s impending departure is “symbolic of a brand that can’t quite decide which direction it wants to go.”
“Under Armor has already gone through several transformations in an attempt to address declining sales and brand issues, but as a recent series of poor quarterly results demonstrate, there is a successful path to rebuilding the business.” “We haven’t found it yet,” Sanders said. he said in an email note.
“Through many twists and turns, we have created a brand that is increasingly confusing for consumers and our wholesale partners,” Sanders continued. “As a result, Under Armor has been easily overlooked. No matter who takes the CEO seat, fixing these issues will not be easy.”
